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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: HeyRainier who wrote (273)	2/2/1998 8:24:00 PM
From: HeyRainier	Read Replies (1) \| Respond to of 1720

[ PERLF ] I just had completed my third conversation with the CFO, Doug Langford of Perle Systems. Also, the other day, I spoke to the analyst who covered the company. I hope I can put together everything soon. Highlights: - Expects past period of losses to be left behind - Diversifying/Transitioning to fast growing, higher margin Remote Access Server market. - AS/400 mkt still growing 5% - 10%. Not yet the sunset industry others had thought it to be. Company plans to increase market share in this arena as well. - Sales momentum for R.A.S. products up 30% - R.A.S. sales make up for about 11% of sales; up from 5% about a year before. Targeting 24% of sales next year, and 48% the next. - Major SG&A expenses once used for product promotion now are over with, and can expect to have the SG&A, as a percentage of sales, to float to the mid 45% level (the peak was around the mid 75%--yikes). - The combination of the reduced SG&A expenses, plus increased sales growth, is expected to make the most major impact to the bottom line earnings over the longer term. - The company turned Cash Flow positive as of the first quarter of their fiscal year. 2nd quarter also Cash Flow positive; company expects to remain in positive territory - Recent insider buying--though still not yet showing. The head of US Operations was reported to have purchased 20,000 shares last quarter. Others have followed suit, though it appears that it was also done through the purchase of stock options. Insiders own about 20%; with the CEO owning 15%. - Analyst who covered this thought the issue was very undervalued. Recognized that the issue was trading below book value. Cited that fair price was at par with Sales per share. That would be around $4.00.... The verdict: Cautiously Optimistic Still waiting for that close above $2.00 Rainier