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Technology Stocks : FORE Inc.
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To: Chuzzlewit who wrote (11688)4/8/1999 6:05:00 PM
From: Trevor Goodchild  Read Replies (1) of 12559
 
Your screening method is biased. This past year wasn't a stellar year for FORE and it's been reflected in the price the whole year, preventing FORE from making acquisitions. Your screening favors companies that write off acquisitions as a special charge while recognizing the revenue. I'll bet WCOM is a big hit with you.

DSO is higher for FORE because their core products are sold to traditional corporate America with their traditional funding cycles (annual budget, quarterly commitments) and much of last year's and this year's IT budget has been diverted to Y2K. I see a swell of backbone spending on the horizon. I'm not excusing 126, because that sucks, but it's obviously an accounting trick to recognize sales early.

Here's my spin on Fore's DSO and its effect on the current run up. It was ridiculously high so FORE, which had been borrowing future earnings to make previous quarters, obviously expected a shortfall for this quarter (1st Q in 99) if all things continued as before. They warn about this quarter's earnings falling short. The stock tanks. then something different than expected happens. A new corporate fiscal year frees up spending for companies in a robust economy. FORE finishes the quarter much better than their earlier, gloomy predictions. Insiders start buying and the stock runs up like crazy.
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