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Technology Stocks : Firstwave Technologies, Inc. (FSTW) -- Ignore unavailable to you. Want to Upgrade?

To: Timoteo who wrote (226)	1/3/1998 3:22:00 AM
From: Kailash	Read Replies (1) \| Respond to of 1205

Timoteo - I think it's unlikely Broc responded with such urgency to a drop in the price. Remember, for that to happen, their PR people would have had to work overtime on New Year's day--unplanned! And have they ever shown any interest in the price fluctuations of the stock before? The NetGain acquisition was announced on the first business day of the new year because the acquisition was completed effective the last day of 1997. Didn't the earnings report simply come in that announcement? I find it hard to gauge how significant Broc's new initiative is. They apparently succeeded in their early years by having a concept a few paces ahead of the competition--it seems less likely they are in this situation now. On the other hand, the market may be more mature and the issue is not so much radical innovation as a solid company with solid products and some good new ideas worked into the existing system. Which raises the question of the integration of their own products--how does NetGain mesh with TakeControl? The management seems focused on turning the company around rather than hyping the stock, so it will be fun to see if it pays off. If they are already turning around financially, which they seem to be doing, that is surely a great sign--they could take off if NetGain is a success. If you look at the last quarterly report, you see that they have turned around entirely by cutting costs--revenues appear to have been dropping all along, specifically from new software sales. At the same time, margins have improved dramatically across the board: FOR THE THREE MONTHS ENDED -------------------------- SEPT 30, SEPT 30, 1996 1997 -------- -------- (IN 1000s, EXCEPT PER SHARE AMOUNTS) NET REVENUES SOFTWARE $ 2,532 $ 921 SERVICES 1,495 1,204 MAINTENANCE 1,245 1,254 OTHER 202 131 ------- ------- 5,474 3,510 ------- ------- COST AND EXPENSES COST OF REVENUES SOFTWARE 541 156 SERVICES 1,305 828 MAINTENANCE 477 364 OTHER 196 131 SALES AND MARKETING 2,779 1,368 PRODUCT DEVELOPMENT 436 587 GENERAL AND ADMINISTRATIVE 1,316 67 ------- ------- 7,050 3,501 ------- ------- OPERATING INCOME/(LOSS) (1,576) 9 INTEREST EXPENSE (40) 0 INTEREST INCOME 59 46 ------- ------- INCOME/(LOSS) BEFORE INCOME TAXES (1,557) 55 INCOME TAX BENEFIT 574 0 Loans appear to have been paid off--some of you guys know all about this I take it. And software development costs actually went up while general and administrative expenses were brutally slashed--perks out the window? So this inspires confidence in principle. What will be interesting to see in the next report is whether sales went up, or whether cost containment alone is producing the turn-around so far. Kailash