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Technology Stocks : Documentum (DCTM) Software -- Ignore unavailable to you. Want to Upgrade?

To: Leto who wrote (551)	10/21/1999 4:43:00 PM
From: Craig Lacy	Respond to of 600

Earnings out and then link was terminated. Most was as expected reflecting soft revenues. Administrative and General expenses doubled on flat sales and that is worrisome. Explanation is in order. Selling and Research Expenses held in check. All for now, that was a quick glance then I lost the link. Craig

To: Leto who wrote (551)	10/24/1999 12:44:00 PM
From: Asymmetric	Read Replies (1) \| Respond to of 600

Documentum ... On the Way Back (10/22/99) (Chuck Phillips of Morgan Stanley) Documentum reported revenues of $33.8 million, which topped our estimate of $31.7 million. License revenue was $19.5 million and constituted 58% of total revenues. License revenue was down 10% year over year but up 23% sequentially. Earnings per share were a loss of $0.08, versus our estimate of a loss of $0.10 and street consensus of a loss of $0.10. Q3 represented the first upside to estimates in a year. Documentum started the quarter with new sales force management and a new release of its core product. The company also stated that Y2K was dissipating as an issue in the sale cycles and prospects were moving forward with projects. We have raised our estimate in the current year to reflect the $0.02 upside in the third quarter. We have increased our fiscal 2000 revenues by roughly $30 million. As a result, we have the company returning to profitability in 2Q2000 and have increased our F2000 EPS estimate to $0.20 on a fully diluted basis from a loss of $0.17. The company rolled out a broad e-commerce initiative at its user group conference two weeks ago and has cleverly built on its traditional strengths to enter a new market. Management is betting that customers will need sophisticated content management as they roll out Web store fronts for things like catalog management. Documentum has finally gotten its traditional customers to think of the company in another context and consider using Documentum products for e-commerce applications. Step one was getting the products updated to be Internet aware of the bulk of that work has been done. Step 2 was selecting the right target markets and training the salesforce. We're into step 3 which is educating the market on the new strategy and building reference sites on a new application segment. We delineate between the company's new e-commerce strategy, which was only recently unveiled to its customers, and a technology plumbing upgrade that release 4i represented. The plumbing upgrade which packed in more Internet standards (browser support, Java, XML) and moved away from client/server architectures has been of more importance near term. Competitors had been painting Documentum as a complex, client/server products with high installation and distribution costs. With fresh plumbing and new sales management, Documentum's win rate is increasing even in its traditional markets for document management and that's still the large majority of revenues. The e-commerce initiatives should take the company into new application segments eventually but the impact will likely be felt next year rather than this year. Of the 51 deals in the quarter, the company highlighted three that involved e-commerce content management. The good news is that the new applications areas have shorter sale cycles since customers are hot to trot to post up e-commerce applications.