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Technology Stocks : BORL: Time to BUY! -- Ignore unavailable to you. Want to Upgrade?

To: Bipin Prasad who wrote (7567)	11/19/1997 7:23:00 PM
From: The Tuna	Read Replies (5) \| Respond to of 10836

<<RE: I think the market is telling us how much VSGN is worth. I think the market is telling how little it understands regarding the technology trends (especially in regards to the hot enterprise market), and what a tools company needs in order to be the technology leader.>> Uh, no. The market is really telling you what it thinks about this purchase. It's a stinko. OK, so in principle it's a reasonable idea. However, look at a couple of things: VSGN is not "the" leader in CORBA implementations. In fact, it's not even a particularly good one. IONA's CORBIX is a much better tool from the standpoint of functionality. The only thing Visigenic has been pretty good at (and, to give them credit, they've done far better than IONA at this) is marketing fuzz. So, the strategic alliances of VSGN are probably the real prize in the purchase. VSGN does not make money. It does not look even close to making money. What is worse, even though CORBA is likely to be important, eventually, the imminence of its widespread use continues to be greatly exaggerated. CORBA has been in the works for the last 5 years now, and it is likely that it will take at least a couple more before it makes any significant inroads in the marketplace (hey, don't believe me if you don't want. Talk to a technical analyst in the field). Plus, the Redmont guys are not particularly keen on it. Not that by itself that's a killer, but just another obstacle. VSGN has 170 people. Not an easy integration, especially since VSGN is not a money-making operation (nor close to doing so anyway). I'd be shocked if all 170 still have jobs long. Borland, after all, is not the kind of company with, say, $9 billion itching it in its pocket. And, of course, the prize of the acquisition. There was a reason why VSGN's price had come down from the teens. This is a hideously expensive purchase. Everything else could have been overcome by the strategic aspect of the purchase. But this price was just ridiculous. Of course, the market is also fixing that, although that's a small consolation, especially to those with options. Borland was just starting to come back, and this will put a wrench in the proceedings. It's not like Borland has much room to have 1 or 2 quarters with bad results because the integration wasn't perfect. And, as Rational stockholders are painfully aware, integration of companies, even if they are so closely located, is hard to do without a 1-2 quarters cost (not the cost already planned by Borland for Q2, but the loss of productivity and market focus). Maybe Borland can pull this off. The market is betting it's not going to be without much cost and a real, painful delay in the comeback of the company. With the last acquisition, the shareholders were stuck. This time, they have a chance to back off. Probably unlikely, but at least they'll vote.