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Technology Stocks : i2 Technologies

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To: Mohan Marette who wrote (801)	10/22/1998 10:06:00 PM
From: xfiles	Read Replies (2) of 2339

I'm sorry, but the very last paragraph of your summary is the key point. i2 said they are NOT comfortable with the current consensus revenues forecast (of around $510 M) and they also indicated that they are seriously considering dropping operating margins to 10% -- in order to free up cash to invest, e.g., in product development and hiring. This news clearly surprised the analysts. In other words, just like all the others, ITWO is suggesting (as I read it), 30% or so rev growth and EPS growth below that, if they implement the reduced oper. margin plan. Add to that the rising DSOs, reduced cash, seq. flat deferred revenues (despite good top-line growth). All of these things may have perfectly fine explanations. They may even make good sense. But... The stock is going down, IMO.

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