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Technology Stocks : MMTM
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To: Charliss who wrote (22)1/19/1999 11:09:00 PM
From: Charles T. Russell  Read Replies (1) of 68
 
Well thought out James and Charliss. Lets look at each of the lines of business:

1. E-Commerce - PSFT engineers have been working on e-commerce solutions for quite a while. For the most part, these solutions have not been integrated into the PSFT main product line. I think PSFT was concerned that dipping their toe too heavily into this line of business might concern analysts that they were straying too far afield reagarding major focus. Hence MMTM. A spinoff focusing on a separate LOB using PSFT technology, valued separately from the PSFT ERP/HR LOBs.

2. Analytical Products - Again. I believe PSFT already has product that has not been brought to market under the PSFT brand. These products will be remarketed under MMTM. The add-on products focus on a specific niche, often ignored by the ERP vendors. Will it compete with EPM? I don't know. Maybe someone else can answer this question.

3. Vertical Market Packages - I believe they may compete with the ISVs and the "People Partners". Again this is a niche PSFT cannot fill and remain impartial. I believe that they see an opportunity to exploit their technology and will allow MMTM to take it to market.

PSFT spinning off MMTM is very similar to Barnes and Noble spinning of their Internet division from their brick and mortar operations. Different business models are valued differently.

The MMTM stock can be valued (overvalued perhaps) using the same criteria as other e-commerce corps, rather than a hybrid of both E-Commerce and ERP.

I was also intrigued by the Repurchase Option. How did you come to your upper valuation of $67? At first I thought the option was inserted to prevent a third party takeover of the stock during the initial two year period.

I'm not a close follower of CA, so I can't really comment on your last point. I would encourage others to help us debate these issues.
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