Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Done, gone. who wrote (7986)	11/19/1997 11:03:00 PM
From: Colin Christie	Respond to of 13949

A recent DLJ research bulletin report (excerpted) November 10, 1997 2716-97 RESEARCH BULLETIN Comments on the Technology Roundtable Interview in Barron's Over the weekend, Barron's published a technology round table discussion. A major topic of discussion and something we've promoted for sometime is the crowding out affect of Year 2000 spending on other infrastructure (hardware and software) investments in 1998-99. In other words, the cost of solving a company's Year 2000 problem is expected to reduce the amount of dollars that would otherwise have been spent on areas such as packaged software implementation. The beneficiaries of this trend will be those companies providing Y2K solutions. On the large-cap side, we believe Electronic Data Systems (EDS - rated buy), Computer Sciences (CSC - rated buy), and Keane (KEA - rated market performance) all stand to benefit. Of the small-cap companies under coverage, we believe Complete Business Solutions (CBSL - rated buy) and BDM International (BDMI - rated market performance) should benefit from this trend.

To: Done, gone. who wrote (7986)	11/19/1997 11:11:00 PM
From: Colin Christie	Respond to of 13949

More from DLJ Research Report (11/10/97): Accounting for Year 2000 According to the FASB, companies are expected to expense Year 2000-related charges as they are incurred as opposed to capitalizing costs or accruing costs or losses in advance. As companies awake to the reality that Year 2000 compliance-related costs will probably amount to no small change, accounting regulators have devised a standard accounting methodology to keep investors abreast. The FASB recommends that costs associated with the rewriting/modification of software related to Year 2000-compliance be charged to expense as incurred. One way companies providing Y2K solutions can get around this, however, is simply to replace your entire system instead of fixing your existing system. If a company decides to completely over-haul their software or hardware by purchasing an entirely new system, then costs can be capitalized. Some companies with aging legacy systems are opting to upgrade to a client/server architecture and, consequently, can capitalize or accrue the costs. First Data (FDC - rated RL Buy), for example, has previously said that it will incur $35-plus million in expenses per year in 1997 and 1998, which amounts to about $0.04 after-tax per year which is already accounted for in our fiscal 1997 estimate of $1.51 and fiscal 1998 estimate of $1.75. While no small change, in our opinion, this simply represents the ongoing costs of doing business. EDS expects to spend about $150 million to solve its Year 2000 problem, however, EDS should also generate over $1.5 billion in revenues from solving its customers' Year 2000 problems.