PSFT - Fiscal 1998 - Discussion for the next year Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year

PSFT 0.0001000

0.0%

Oct 29 5:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: JC Reddy who wrote (2426)	10/2/1998 7:06:00 PM
From: Melissa McAuliffe	Read Replies (2) of 4509

I mentioned this previously, but I heard on cnbc this morning something about license growth being less than anticipated. I don't know whether this is true or not but just mentioning it as something I heard. I find it hard to believe that two analysts downgrades would cause this stock to drop like it did.. So it would seem that someone knows something we don't. I have watched this happen twice before where I was very closely involved with the stock vs. just hearing about it on a stock I don't follow.. And in both cases, it was indicative of a less than stellar quarter. I'm not so sure I think that's the case here. But then again, if psft just hits the estimates on the nose and license fees decline, that could be perceived as very negative.. Or if they beat estimates by .01 and license fee growth dropped a lot that could also be bad. They could actually exceed their estimates by .05 all through services and I think that would cause the stock to drop big time..(obvoiusly this is totally hypothetical). I think that right now the focus is on license fee growth and that's probably going to be the problem. I don't know where cnbc heard this since I haven't seen it anywhere either... My guess here is that they will hit their estimates with lower license fee growth and I can't say what that will do to the stock..Remember that psft has a ton of $ in deferred revenue that they should be able to use some of this to make the number. Aside from the deferred revenue I'm sure Ron Codd has built up reserves that can also be used. Here's what I've come up with...(these #'s may be slightly off because I'm pulling them from my head) If psft has 225M shares outstanding and their tax rate is 36% then every $3.5M in revenue or or 3.5M in decreased expenses adds .01 to eps. ...(hope I calculated this correctly). So one of two things will happen here...(I think..) they will either miss their number by ALOT (which I think the chances are 0% of happening) OR license fees will be down and they maybe just meet expectations vs. the .01 or .02 they are usually over. ...or maybe over by at most .01... The company manages earnings too well and in addition to the deferred rev. has built up reserves (I'm pretty sure). These reserves are there to make sure the quarterly numbers are hit.. BUT the one thing they can't totally control are the amounts of license fees generated...So one might say...well, that isn't so bad. Except for the fact that everyone's eyes are focused on license fee growth. So my personal guess here is that yes, the stock could go lower or it could have bottomed here. But it's not going to be a disaster quarter as seems to be reflected in the stock price today. Plus, there is no way that if psft were going to miss this quarter that they would have been so positive in that conf. call. I just don't buy it....Then again, hitting expectations is actually considered a miss it seems in some people's minds. And right now with the market on tenderhooks and this sector somewhat out of favor slowing license fees isn't good..... When someone listens to that conf. call could you see what they said specifically about license fee growth? Sorry if this is long....I just got carried away and kept writing. Hope this makes sense..went back and read it and wasn't so sure...<g>

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next