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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Mao II who wrote (101741)	6/12/2000 9:01:00 AM
From: Lane Hall-Witt	Read Replies (1) \| Respond to of 120523

PRGS: Forgotten former Gems earnings play (a couple of quarters back, if I recall) is announcing earnings on Wednesday, June 12, before the market opens. This one closed Friday at 16 and is expected to announce $0.24 Wednesday and $1.04 for FY2000. Forward P/E is 15.4 Estimated PEG based on a five-year growth rate of 20 percent: 0.77. It also has $4.66 per share in cash and a debt-free balance sheet. 30 percent return on equity. The company sells software development tools (embedded software components, applications servers, integrated development environments) and has a very large installed customer base that includes 60 percent of the Fortune 100. The company is a cash cow, with a growing annuity-income base from ongoing maintenance contracts and royalties that are paid when its components are embedded into commercial software developed by its customers. The company has a coherent Internet strategy that should prove to be a significant growth driver going forward. It has Internet-enabled all relevant development tools and has industrial-size products in the same space as ALLR's Cold Fusion. Most exciting, it is aggressively leveraging its products for the emerging ASP market and has had great initial success with this strategy. Risk Factors: heavy overseas sales subject the company to currency issues (strong dollar a negative); growth last quarter was slow due to the impact of Y2K, especially on ERP spending -- as the ERPs have been slow to ramp after Y2K, PRGS will likely feel some effects; the company's growth in services is outstripping its growth in software licensing, which means profit margins are under some pressure (services being lower-margin). Someone should organize a leveraged buyout for this one--.