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To: Dale Baker who wrote (8710)	7/13/1999 9:03:00 AM
From: JSB	Read Replies (1) \| Respond to of 118717

With luck, China.com will open before I go to the golf course. Last tune up round before I play Kapalua next week. I really need to figure out whether to hold my positions or even add to them or close most of them before I leave. I think Latin America will have some effect, since the market always over- reacts, but I can't decide how much.

To: Dale Baker who wrote (8710)	7/13/1999 9:39:00 AM
From: Mel Spivak	Respond to of 118717

Here is a glowing review of PERI: Stock of the Day Jul 13, 1999 Periphonics: Benefiting From the IRS by Adam Lowensteiner 7/13/99 If you have filed your taxes with the IRS via phone, most likely you used a system created by Periphonics (NASDAQ:PERI - news) to complete the task. This is because Periphonics, once a subsidiary of Exxon (NYSE:XON - news) , makes the database systems that can be interacted with by using a phone. The company posted a smashing fourth fiscal (May) quarter last week, trampling analyst estimates by 50%. This big surprise comes amid a turnaround, which seems to be almost complete. The company beat estimates for three reasons: Higher revenue than expected, a better gross margin than expected, and a slightly lower tax rate. The company posted $0.36 a share, 50% ahead of the $0.24 a share consensus estimate among three analysts, according to First Call. Total revenue in the quarter popped 36% to $44 million, up from $32.5 million last year. Periphonics, a member of the Magic 25 Class of 1997, saw its business dry up during 1998, partially due to an industry slowdown, which caused management to pump more money into its research and development, readjust its product line, and beef up its sales department. The company did so by focussing on future products that could be attractive to its client base. The company focused on adding speech recognition to its products. Periphonics also created a calling card platform product, which has become a very popular item among telecom companies. Finally the company also pushed the fact that its databases could be tapped into by using the Internet, not just a phone, expanding the options of customers looking to use Periphonics' wares. The new products were successful in the fourth quarter of 1998, as the company reported a 108% jump in the new products sold over the prior year. The new products accounted for more than 20% of total systems revenue, a figure that should climb in the quarters to come. The company also collects maintenance revenue, which it gets by servicing present customers, or revenue it may receive from upgrades for systems the company sold in the past. So why buy the stock now that it has more than tripled in a little more than three months, to Monday's close of $19.38? For one the company has a clean balance sheet and conservative management. It has always carried cash and has yet to take on debt. In addition to new products and all the orders the company has received in the last several weeks, another potential catalyst is an overall industry consolidation. Already in recent months competitor Brite Voice (NASDAQ:BVSI - news) has received a friendly bid from InterVoice (NASDAQ:INTV - news) . This is not to say that Periphonics is next on the takeover block. But there always have been rumors that Lucent Technologies (NYSE:LU - news) could be eyeing these types of companies, especially those with innovative products. Having a clean balance sheet, even through rough times, is no negative either. A potential acquirer would also be attracted to Periphonics' improving profitability. One reason for its surprisingly strong fourth quarter earnings were its enviable margins. The company's gross margin of 53.4% was 500 basis points greater than the same quarter the prior year. For the full fiscal year, the gross margin was about 50% of total revenue, a range where it should be for fiscal 2000. '[The company] greatly improved margins,' says Michael Coady, an analyst at Sidoti & Co., who actually doubts the margins will be sustainable throughout fiscal 2000. Even so, the company has already announced six large orders in the first month of fiscal 2000, equaling about $14 million in business. Since most of this business will be shipped in the first half of the year, management believes it gives great visibility to the revenue growth in the next two quarters. The best part of this news is that Periphonics' latter quarters are usually its strongest in terms of revenue. Also, the fourth quarter should look especially good given that it will be compared to a depressed period the prior year. Bottom Line Assuming the company can pull off earning $1 a share in fiscal 2000, the stock could reclaim a two-and-half year high of nearly $35 a share. For more in-house professional stock analysis and commentary, visit us at Individual Investor Online.