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To: Larry S. who wrote (21109)	10/22/1999 8:04:00 PM
From: Susan Saline	Respond to of 53068

diver of the day .... no stock no company is safe .... from over selling ... on ... the FEAR on special today is ..... Friday October 22, 6:00 pm Eastern Time FOCUS-Pervasive shares plunge after warning to analysts (recasts lede, updates stock prices, CEO comments from interview, adds details throughout, byline) By Eric Auchard NEW YORK, Oct 22 (Reuters) - Shares of mobile software developer Pervasive Software Inc. (NasdaqNM:PVSW - news) plunged 67 percent on Friday after the company warned analysts to expect higher costs for the next year that could lead to a string of losses. Pervasive stock fell 24-1/16 to close at 12 in heavy trading of nearly 12 million shares on the Nasdaq stock market, where it was the biggest percentage loser of the day. On Thursday, Pervasive posted earnings that met Wall Street xpectations, but later warned analysts in a conference call to expect higher costs as it seeks to stake out the lead in a fast-growing market for what is known as pervasive computing. The company builds software that delivers Internet data via wireless links to mobile phones and handheld computers no matter where a user is located. Customers include Theglobe.com Inc. (NasdaqNM:TGLO - news), the U.S. space agency NASA, Chase Manhattan Bank (NYSE:CMB - news) and Coca-Cola Co. (NYSE:KO - news). President and Chief Executive Ron Harris said in a phone interview after the stock sell-off had occurred that: ''We are investing more aggressively because we are so confident of the long-term prospects ... of the wireless Web market.'' ''I have never made a short-term decision in my whole life and I am not going to start now,'' he said. Analysts said these higher expenses over the next four quarters for its Tango Web development effort could lead to a string of losses. ''We have lowered our revenue targets in consideration of slower-than-expected domestic database business,'' Robert Tholemeier, an analyst with FAC/Equities said in a research report to clients on Friday. ''These changes result in a loss for the next three quarters,'' he said. He cut his rating on the stock to ''accumulate'' from ''buy.'' Pervasive reported net income of $1.5 million, or 9 cents per diluted share, for the first quarter, ended Sept. 30, up 58 percent from $982,000, or 6 cents per share, for the same period last year. Revenues of $16.7 million compared with $11.8 million a year earlier, but were shy of the $17.5 million revenue consensus Wall Street analysts had projected. In the conference call, Pervasive officials said first-quarter revenue could have been higher if $500,000 worth of software had shipped as expected during the period. Harris said an outside product fulfillment contractor it uses was partly to blame. Pervasive also failed to capture $200,000 worth of software sales because it did not have adequate supplies in stock, the company told analysts. Officials also pointed to several opportunities in the $150,000-$200,000 range that did not close during the quarter, including one deal that closed on Oct. 4, Tholemeier said. Harris said the first quarter has traditionally been the company's toughest quarter, since sales slow in the summer months and the bulk must take place in the month of September. He also said that first-quarter sales had been hampered by recent moves to decentralize its workforce from its Austin, Texas headquarters into the field that led to a temporary loss of productivity. The company has added 26 new sales people in the last two quarters, he said. Pervasive's press release announcing its first-quarter results made no mention of these issues. But company officials confirmed the details Friday afternoon, after the sell-off was well underway. ''Once again, we demonstrated solid revenue and profit growth in the first quarter of fiscal 2000,'' Harris had said in the company's earning statement, giving no clue to the revenue shortfall or the plan to step up accelerate spending. ''In addition, Pervasive is building momentum toward becoming the leading provider of application development and deployment solutions...to power...pervasive computing.''

To: Larry S. who wrote (21109)	10/22/1999 8:07:00 PM
From: Susan Saline	Respond to of 53068

Pervasive (PVSW: news, msgs) plans to spend big to attract Web developers to its Tango product. Hambrecht & Quist analyst Jim Pickrel slashed his projections for next year from a profit of 50 cents per share to a loss of 29 cents. Pickrel also scaled back his sales estimates for next year to $76 million from $83 million. He also cut his rating on the company to a "market perform" from "buy". He was joined in the downgrade by analysts from Needham, Robertson Stephens, First Albany and others. See Ratings Page. The stock dropped 24 1/16 to 12. Pervasive Software chief executive Ron Harris said the company took the step so the company can address the huge wireless market. "Wall Street doesn't like surprises and they don't like surprises that take down profitability," Harris said. The company will spend $13 million over the next year, mostly for marketing the new initiative. Harris added the company will start seeing "a payback" in the second half of next year. The "abrupt about-face" -- as Pickrel termed the new plan -- came after the company reported third-quarter earnings that were in line with analysts' expectations. Pervasive earned 9 cents per share on sales of $16.7 million. That compares to 6 cents of earnings on revenue of $11.8 million in the same quarter last year.