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Technology Stocks : LEGATO SYSTEMS LGTO -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (589)	1/19/2000 8:40:00 PM
From: gmccon	Read Replies (2) \| Respond to of 1138

Look at the gorilla-factor. In a similar sector, EMC and STK used to be competitors. However, EMC had everything going for it and squashed STK like a bug. Now look at VRTS since it's acquisition of Segate's storage software division. For those who were following this sector when this acquisition occurred, you will remember that anal-ist said then that this would happen. STK has not recovered. Will LGTO? Greg

To: Skeeter Bug who wrote (589)	1/19/2000 8:41:00 PM
From: Mark T. Heath	Read Replies (1) \| Respond to of 1138

I'm so grateful I bailed last week. Sorry to see the news for all of the longs here. It's obvious word of this was getting around as the stock began as slow and steady decent from $80, but as usual the small investors like us have to find out the hard way. Look for a bunch of downgrades tomorrow. I think management has made a lot of institutions look foolish and they won't take kindly to that at all.

To: Skeeter Bug who wrote (589)	1/19/2000 9:03:00 PM
From: aliveinsf	Read Replies (2) \| Respond to of 1138

CFO hadn't resigned at 4:45 p.m. His secretary said he had no intention of resigning. If this was Japan, he would have fallen on a sword and saved face...now he has to go home to his wife and kids and tell them what it is like to be a scumbag coward. I hope the SEC drops on him like a rock...handcuffs and all....

To: Skeeter Bug who wrote (589)	1/25/2000 2:28:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 1138

Skeeter, I've looked very hard at the numbers, and tried to get a take on the cause of the restatement. I've come to some tentative conclusions: 1. Neither the CEO nor the CFO is a crook. I think that what happened is that the auditors decided to apply a more stringent standard for revenue recognition than existed in the past. There was an excellent on-line article by Lisa Goldbaum in Forbes that discussed this issue. 2. I agree with you that revenues will benefit from the restatement due to the increase in deferred revenues. It would have been nice had the company restated earnings for several years using the new revenue recognition guidelines. Assuming that LGTO was consistent in its revenue recognition policies, we would have seen an increase in revenues this year because of the overstatement of revenues in the prior year. 3. The stock is still very expensive, but given the growth prospects (on a restated basis), I think that the valuations are coming into a more reasonable range. I have not yet done a valuation on this stock, but my gut tells me that something in the range of $20 - $25 may be reasonable (although not cheap). I believe that the real question is whether there is any reason to believe that shortfall was due to decreased order booking rather than a change in revenue recognition policies. Finally, this episode underscores the problem with investing in growth at any price. There are any number of stocks whose bubbles may burst on something as trivial as a change in revenue recognition policies. Investors pay entirely too much attention to earnings and ignore the "quality" of earnings (i.e. operating cash flow). TTFN, CTC