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Technology Stocks : CGRM Centigram

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To: Mickey Szilagyi who wrote (291)	12/2/1998 10:10:00 PM
From: David R	Read Replies (1) of 333

I am certain that you are misreading the Q3 results. During the third quarter of fiscal 1998, Centigram finalized the sale of the company's CPE business unit, recorded estimated expenses for its intellectual property dispute with Lucent Corporation and recorded a write-off of in-process R&D related to the purchase of The Telephone Connection, Inc. They took a non-recurring charge of $13.4M for "in-process R&D write-off and estimated intellectual property dispute costs". I can not imagine that they took more than a few $M in R&D costs for a company that they bought for $12M. I think that they knew in Q3 how much the Lucent deal was going to cost. I do not expect that they will have a large chare (if any) this Q. With regards to the balance sheet, the statement shows ~$52.2M in cash, and a stockholders equity of $64M (~$9/Share). As far as Y2K, their newest product is Y2K certified. They will have a Y2K fix for 6.0 and 5.04 by end of year. All others (older than 5.04) will have to upgrade. THis is a reasonable policy. But I think that they were a little late delivering Y2K. Should have been inplace by Jan 1, 1998.

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