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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (7594)	11/28/1997 11:01:00 AM
From: Roger A. Babb	Respond to of 9285

Bill, it is looking less likely now that Zitel will have a year end rally. In fact it could be the opposite effect. My earlier rally expectations were based on potential contract announcements. But give the insider selling it is obvious that there is nothing to announce. I think ZITL is headed below $10 very soon. Game over.

To: CalculatedRisk who wrote (7594)	11/28/1997 11:08:00 AM
From: Pancho Villa	Read Replies (1) \| Respond to of 9285

Hi Bill, my understanding is that many companies instead of "patching up" old Cobol systems to fix the y2k problem are just taking this as an opportunity of purchasing brand new systems. Creating in fact what may be intersting buy opportunities [haven't look at any]. So the year 2000 problem may accelerate the death of Cobol. Pancho

To: CalculatedRisk who wrote (7594)	11/28/1997 11:15:00 AM
From: Roger A. Babb	Read Replies (1) \| Respond to of 9285

Bill and All: sometime in the next few days I will make a long post on my favorite criteria for evaluating software and Internet stocks. I will make a very quick summary now. My favorite measure of value is market cap per employee. Companies with a very high cap per employee are over valued and likely to fall (CTXS, SEBL, YHOO, ZITL). Companies with a low value are likely to go up (BROC). My reasons are: The main value of a software company is the expertise of its people, not existing products. The company must continually be doing R&D to hold on to it market share and grow. A high value means that its staff is over-valued, either the staff must grow (more expenses) or value will drop. A low value means that new products are under development. The highest values occur at the end of a product cycle when the profits are being reaped from the last product but little investment is being made toward new products (CTXS). The lowest values are just before major new product introduction (BROC).