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Technology Stocks : Zitel-ZITL What's Happening -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (13737)	1/17/1998 1:50:00 PM
From: John Kratus	Read Replies (2) \| Respond to of 18263

The Jan 1 SF Chronicle article quoting Chait should be required reading for shorts and longs. The day after the article appeared, ZITL jumped to its high for 1998, perhaps based on Chait's rosey statements: ''We have not met our expectations for Year 2000 sales, and we're not happy about that,'' said Arthur Chait, Zitel's vice president and general manager. ''However, things should pick up dramatically in the first quarter of 1998.'' The article goes on to say that: "The company is predicting strong sales next year of its code-conversion software factories." Almost certainly this comment also came from Chait. A few points: First, the #2 person a Zitel, Chait, is being interviewed rather than #1 Jack King. Why? Yes, Chait is in charge of the y2k division, but wouldn't the Chronicle want to talk to the #1 person at such a small company? The obvious answer is that King has no credibility left whatsoever on Zitel's y2k prospects. Chait is still a relative unknown, so the investment community might give his statements more credence, until shown otherwise. But how prescient is Chait? When he referred to "the first quarter of 1998," he must have been talking about calendar 1998 rather than fiscal 1998. Zitel's fiscal 1998 first quarter ended December 31, and there was not a contract in sight. It would be too bad if any longs bought ZITL on that apparently innocent ambiguity! So how's the market for those code factories going? Well, the first quarter is already 1/6 in the bag, and so far it sure looks a lot like last quarter and the quarter before that and the quarter before that. Of course, ANY sales is better than NO sales, but ANY sales is not the same as "strong sales." My guess is that Chait's reputation is headed into the Dumpster along with his boss's. It's sad really. It's hard to know which will run out first: Zitel's available money or its available managers with intact reputations. John