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Technology Stocks : BEA Systems (BEAS) - Undiscovered Growth Stock -- Ignore unavailable to you. Want to Upgrade?

To: sandintoes who wrote (1033)	1/30/2000 1:00:00 AM
From: sandintoes	Respond to of 2477

From GNET's own Mark Johnson, an interview with Bill Keithler, who also likes BEAS..... Mark Johnson, Editor of the Internet Financial Connection, provides the following interview with Bill Keithler of the Invesco Technology Fund invesco.com. Below is the write-up. Bill Keithler, manager of the $6.5-billion Invesco Technology Fund (up 145 percent in 1999), admits that the valuations of many high-tech stocks are a bit high. While he's not expecting a repeat of 1999, Bill is looking for a reasonably good year for tech stocks. His fund is well diversified and owns about 105 names. Bill likes to invest in companies that are leaders within their sectors and dominate their respective industry. He argues that the returns of the leaders tend to be higher when compared to companies that are not leaders in their respective industries. He will expand his exposure to a given subsector if the market dynamics support strong growth in that area. An example of one area where he has expanded his exposure is the storage market. "We own market leaders like EMC (EMC 108) on the hardware side and Veritas (VRTS 157 3/4) on the software side. We believe storage will be a long-term, high-growth space," says Bill. Other companies he favors in the storage space include: Network Appliance (NTAP 102 7/8), Advanced Digital Information (ADIC 54 1/2), MTI Technology (MTIC 29 1/2) and Legato Systems (LGTO 27 5/8). He explains that the software area had been hurt profoundly by Y2K spending cuts In mid-1999, the Invesco Technology Fund had about 33 percent of its assets in semiconductor-related companies. Presently that number has been reduced to 26 percent. Even though Bill has reduced his exposure to the semiconductor area, he is still bullish on the sector. "The semiconductor cycle still has a way to go... The outlook for that area is encouraging... The game is not over yet!" The money that Bill took out of his fund's semiconductor area was used to increase the size of his software holdings. He explains that the software area had been hurt profoundly by Y2K spending cuts and deferrals. Even though the shares of Microsoft (MSFT 98 3/4) have been weak recently, Keithler is still optimistic about the company. He admits that he was a little disappointed with the earnings they just reported but insists they are a "good company" and it is a "good stock to own." Microsoft is expected to soon release the much-anticipated Windows 2000 operating system. Bill believes Microsoft will experience increasing momentum as its biggest product cycle in the history of the company unfolds. Other software names Bill is high on include BEA Systems (BEAS 86 3/8). They operate middleware software, or software that resides between the operating system and an application. This software improves the performance of computer applications. "Their stock could double from present levels" Bill believes the shares of Citrix Systems (CTXS 138 1/4) has "good upside." Citrix operates in the thin client area. They have developed products for the ASP (Active Server Page) market. "We are skeptical with some of the ASP business models out there," he says. "One thing is certain, those ASPs will need Citrix's product. If there is a war going on, you want to buy the guy who is selling the weapons, rather than figuring out who will win the war." SmartForce (SMTF 37 1/2) dominates the computer-based training market in the CD ROM software space and is primarily focused on technical applications. "They are aggressively moving their products and content onto the Internet. No one has established themselves in that market. SmartForce's advantage is they have the content, relationships and the software providers. It will be much easier for them to aim their product toward the Internet than it would be for somebody coming in, starting up without the content. In addition, they have strong relationships with customers. Their potential is huge!... It is a large market with relatively low penetration." Bill believes their stock could double from present levels. In the Internet space Bill has focused on companies that provide infrastructure tools. These companies include: Inktomi (INKT 106), Software.com (SWCM 88 3/4) and InfoSpace.com (INSP 167 1/2). One business-to-business (B2B) company that has been enormously successful in the Invesco Technology Fund is Internet Capital Group (ICGE 130). It is a diversified pure-play holding company in the B2B space. ICGE has an interest in a number of B2B companies that will come public this year. It is a volatile space which sometimes requires a strong stomach. Bill's fund has a relatively large exposure to the optical telecommunications arena. Two of his favorite companies which he owns in that area are Ciena (CIEN 70 3/4) and JDS Uniphase (JDSU 212). He views the pending merger between JDSU and E-TEK Dynamics as positive. It makes a strong company like JDSU even stronger. "They will be able to accelerate supply and capacity to the industry that they serve by virtue of the merger as well as achieve a number of cost synergies down the road. I think it is a real attractive combination. There is a scarcity in this space and the market cannot get enough of the optical stocks right now." Apple Computer (AAPL 110) is Bill's favorite PC maker. He says the company has the freshest and most interesting product line out there and it has really caught consumers' attention. "They have traction in the marketplace as well as a new operating system due later this year. They have done an incredible job getting back on track!" Bill is optimistic about the long-term fundamentals in the technology sector. He does caution that the shares of many technology companies could correct 30 to 40 percent without any change in a companies fundamentals. He believes technology is an attractive area because the world is constantly changing. "Technology is bringing so much in the way of freshness and improvements into our lives. There will always be a market for technology but we have to be very careful about the fact that it is very easy for the game to change. A company that dominated the space one year can find themselves under attack and at a disadvantage the next year." The media has recently glamorized technology investing because of the spectacular returns the industry has returned recently. Bill points out investors should be made aware that there are risks when investing in the technology sector. He believes that investors should have exposure to the tech area but reminds us that it is a volatile space which sometimes requires a strong stomach<?I>