To: TerryKrohe who wrote (14021 ) 6/25/1999 5:04:00 PM From: David Respond to
Good questions, and pretty accurate summary.1. IDX isn't paying attention to the ten-printer business: IDX continues to maintain sales in the AFIS market, although it appears that management emphasis has shifted to the IDT side. We should pay attention to the top line in this area next quarter. As to INS, I think the only winners are the taxpayers; DBII will not see a real profit on that deal. But the IDX shift in overall strategy is a very defensible decision, I think. "2. ORCL I wasn't around for the runup on the ORCL deal back when 'biometrics' was enough of a buzzword to spur speculators into the stocks. The business model for expensive peripherals didn't pan out; it was all anyone had at the time, and they didn't know they weren't going to sell anything that way. When Fowler figured it out, he bought IDT. (He and Scullion actually tried to do it months before the CPQ deal was finalized, but IDT understandably held out.) I still think that the FAA pilot, etc., alone is well worth the investment in F3 and BAT. My guess is that IDX is putting IDT technology in with the Oracle data bases, and that this will create real sales . . . say in calendar 2000. "3. IDT The merger made sense from both sides. If IDT had gone public, it would have slipped a year in its technical and business opportunity schedules while it went through financial and legal hoops. That's a lifetime in Internet business models, and IDT could have entirely lost its lead on its better-funded competitors. Instead, it looks like it is lengthening its lead. All we need is about two or three years in the lead, and we can own the software standard. The merger was win/win, and the market's rate of development has accelerated since the deal was agreed to, making it look even better. As far as IDX beef goes, don't underestimate either the stable revenue flows or the access and control possibilities. And Fowler and Pieper know and like each other. "4. What was the basis for the Learch (sp) lawsuit? That whole thing was played as poor little IDX against the big bad lawyers ... but lawyers don't win by playing bluff, they had _something_ in their hand and we never did hear what that was." Lerach is notorious. He brings scores of lawsuits based on stock price movements. It looked like Fowler goofed on recognizing income from one shipment to a customer, so there was a small case there. The rest of the Lerach allegations were garbage and simply plaintiff's boilerplate. The settlement was not large, and frankly, IDX probably gave it up because the time they would spend on defending, and the issue an unsettled case presented to brokerage houses, etc., would have caused more problems than settling. Lerach's case was just a tiny bit better than a nuisance suit. "5. Scullion named Pres and Pieper named CFO ... shouldn't it have been the other way around since IDT is so big a part of the future of IDX?" Pieper is head of the IDT group, not the CFO. Scullion is in his late thirties or early forties, while Pieper is in his early sixties. Fowler did it right, setting up Scullion. Keep your eye on the two Yuris under Pieper . . . they are also around forty years old. They and Scullion are going to have the opportunity to run the company five years from now. IDX has also brought over a key exec from a competitor (RSA), which is a good sign. I have no complaints with the management positioning.
