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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (5877)	3/5/2001 11:34:09 PM
From: puborectalis	Read Replies (1) \| Respond to of 6445

Veritas Software (VRTS) 63 1/4 +3 7/16: The stock of Veritas Software, an independent supplier of storage management software, was under pressure throughout Monday's session as the market expressed some caution ahead of the company's mid-quarter conference call. Given the preponderance of disappointing earnings guidance from the technology sector, that pre-emptive response was certainly understandable. Now that the call has concluded, however, some investors may be wishing they had held their ground. Doing what few technology companies have been able to do these days, VRTS stood by its original projection for 4% sequential revenue growth and then, after acknowledging that it was not seeing the same widespread economic impact on its business that others have been experiencing, said it was comfortable with analysts' current estimates. The First Call consensus estimate for the March quarter is $0.20 with the low estimate being $0.17 and the high estimate being $0.21. In addition, VRTS made an effort to alleviate the market's concerns about its software sales, which multiplied following Oracle's (ORCL 16 15/16 -1/16) warning, saying it is not counting on any specific, large deals to make the quarter and stating that it expects 2001 sales to grow 45-50%. VRTS management also intimated that it sees no need to change its pricing model, saying it hasn't heard anything about pricing pressure. All in all, it was a refreshingly reassuring call-- a point reflected in the fact that VRTS has recouped nearly all of Monday's losses in after hours trading. Peer companies, such as Brocade (BRCD 37 1/4 +13/16), Network Appliance (NTAP 28 13/16 +5/16), EMC Corp. (EMC 39.20 +0.60) and Emulex (EMLX 27 13/16 +7/16), have benefitted slightly from the VRTS call as well, but given the seemingly company-specific nature of the VRTS outlook, there hasn't been much after hours interest in those companies, or in the stocks of VRTS competitors, such as Storage Technology (STK 10.49), Legato Systems (LGTO 11 3/4), IBM (IBM 104 -0.91), Hewlett-Packard (HWP 30.38), and Microsoft (MSFT 57 13/16 +3/8). If nothing else, the reassuring news from VRTS should help squelch some of the selling pressure that has sent the stock spiralling 62% from its October high of 166 7/8. How far it rebounds is difficult to say. VRTS clearly has a good thing going, but there are bound to be lingering doubts that the company can maintain its momentum given the increasingly challenging macro-economic environment. Furthermore, the market's priorities have shifted dramatically in the past 12 months as growth stocks no longer have the appeal they once did-- even in the wake of good news. At 71.0x est. FY01 earnings, Briefing.com believes VRTS will continue to battle valuation concerns in the absence of further Fed easing and more definitive signs of a broader economic rebound.-- Patrick J. O'Hare, Briefing.com