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Technology Stocks : Intersolv News
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To: Mike Healy who wrote (1053)9/17/1998 5:05:00 AM
From: Ian Burton  Read Replies (1) of 1069
 
Mike - You classify MIFGY as a Y2K stock. As of May 98, Y2K revenues were 17% of total with an expectation of peaking (at around 20%) in mid fiscal. Does really classify them as a Y2K stock? They have many products inc. Euro, XDB etc. which have good potential post Y2K.

The merger deal was struck at around 3-times ISLI revenues. Not cheap. OK you will say that this is academic in an all paper deal - but we don't now know the real worth of an independent ISLI now whereas we did then.

My philosophy perhaps - but investing in any software company is investing in the management. A merger of MIFGY/ISLI is what the managers of both enterprises want.

At the last MIFGY AGM, Martin Waters was asked (by a company founder) to comment on "earnings quality". To which Martin asked "what do you mean". To which the guy could not provide an answer. Interesting moment. (The guy was there with his wife!)

One of my biggest beefs with MIFGY's balance sheet was the level of receivables. Are customers happy if the don't pay up. I was very pleased to see a significant reduction (down to 75 DSO) last results.

MIFGY balance sheet bloated - what with cash?? One thing that I have always appreciated about MIFGY is that they put R&D on the P&L and take it "as it should" in the year. No depreciating over years as an asset on the balance sheet.

So what is your definition of "earnings quality".

And, significantly, have you any indications of the level of ISLI acceptances yet. I have asked MIFGY to issue a statement - but no response as yet.
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