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Technology Stocks : Red Brick Systems -- Ignore unavailable to you. Want to Upgrade?

To: J L Segal who wrote (129)	1/17/1998 4:24:00 PM
From: SEAS	Read Replies (5) \| Respond to of 304

Red Brick Systems - Today (1/15/98) REDB announced profits of 3 cents a share a penny higher than analysts expected. There stock got walloped - dropping $2.6875 or 27.92%. Before you jump on the bandwagon to buy this stock, there is good reason why it dropped while reporting good news - the good news isn't so good. They made money on favorable tax breaks, not on good business practices and deserved the smashing they took today. Why is REDB the Stock of the Week, because they took a bit more of a smashing then they deserve and are still a growth stock. REDB should have been hit for a 20-25% loss, a bit less than what actually occurred, but more importantly they have been closing a lot of deals recently and next quarter looks very good. So we hope that if we buy now after they've been hit we'll reap the rewards of next week.

To: J L Segal who wrote (129)	1/19/1998 8:27:00 AM
From: John Ritter	Read Replies (1) \| Respond to of 304

Good exchange of information and ideas on REDB. Reading these recent messages on SI the 'fall' makes sense, there is enough uncertainity to run the stock down 27% from its recent rise. For Friday last the news was bad, but all the DB vendors had a bad quarter. Probably the runnup was too early under these market conditions. My concern is given the weak performance of Database stocks and the transistion these events suggest, where will REDB's Datawarehousing fit into the equation once this settles down? Will Sybase recover growth, not just maintain revenue, will Oracle suffer from shriking margins, will companies such as VSNT, IONAY, ODIS and Microsoft become the lower cost solution to data management and application development. This might be worth discussing. I don't know the answer, but it appears that REDB has the best data warehousing product. This is what an investor should look for, the best of breed in a nitch, a potential growth nitch.

To: J L Segal who wrote (129)	1/20/1998 11:16:00 AM
From: Smilodon	Read Replies (3) \| Respond to of 304

I was on the conference call. The call was pretty positive. The negatives were weaker indirect and channel sales (4% versus 22%), and a continued need to sell solutions/applications instead of just the technology. Taxes were higher than expected and they still beat earnings estimates, also approximately $3 million of deferred revenue was added, most of this from WorldCom, which helps out for future quarters. The real problem was a later conference call between the CFO and sell side analysts (which I was not on). The CFO guided down estimates to approximately 20% growth in revenue, and declining earning due to investments in R&D and sales force. This resulted in a dramatic change in analyst numbers. It was particularly a problem since the CEO was not on the analyst call (he was on the earlier call). The analyst I talked to felt that the CFO had an almost opposite view of the business than the CEO, whom he had spoken with only a few days before. This led to speculation that the CEO had been fired. I talked with IR on Friday, and they said the CEO had not been fired and was just traveling. He is expected back on Tuesday and will talk with analysts at that time. The way I see it, two things may be happening: 1. The CEO, like many CEOs, is too optimistic and is being correctly countered by a more realistic CFO. This may also indicate a rift in management and possible change. 2. The business is doing fine, but the CFO was trying to hold down estimates so the company has a good chance of meeting or exceeding them. Unfortunately, this process was mishandled leading to a stock plunge and continued loss of credibility with analysts. Either way, this was bad for the company, unless it gives them more encouragement to sell in the near term.