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Technology Stocks : Award Software(AWRD) is back -- Ignore unavailable to you. Want to Upgrade?

To: Jean M. Gauthier who wrote (266)	1/31/1998 10:35:00 AM
From: Mark Brophy	Read Replies (3) \| Respond to of 373

The moral of the Award story is. Don't pay attention to analysts. Do your own research. Or, as Bob Dylan once sang: It's just a ragged clown behind. I wouldn't pay it any mind. It's just a shadow you're seeing that he's chasing. There's are 2 main problems with analysts: 1) They're dishonest crooks whose main function is to drum up investment banking business, not provide you with free objective accurate earnings forecasts. 2) They're lazy, poorly informed, and make silly predictions. Anyone who has studied this company at more than a superficial level has known for a long time that the earnings estimates were far too high, but they had their reasons for keeping you in the dark. Nevertheless, you could've paid attention to SI, especially Mark Kelleher, who is one of the few honest and intelligent people in the investment banking business. He used to be the analyst for Phoenix when he was at Fechtor-Detwiler and now he works for Tucker-Anthony. His past posts tell the story. On Aug. 1 at Message 2022375 he wrote on the SystemSoft thread: USB is having a tough go of it without Microsoft's next NT release that supports the technology. Revenue possible in this area? Absolutely. Meaningful revenue this year? It's getting pretty late... The point I am trying to make is that the 51 cents for the year appears to be a stretch. The same comments apply to Award and Phoenix. He repeated himself Dec. 4 at siliconinvestor.com USB is delayed, according to Bob Angelo on the conference call, because of the delay of Microsoft's Windows 98 operating system, which has the USB enabling code in it. PTEC is also seeing the same USB delay (according to PTEC, not Bob A.) Although the analysts knew the significance of the USB delay, they also foolishly assumed that Award's large Asian exposure would reduce earnings even further. So, they advised their important clients to sell out. However, Award's Asian customers sell their BIOS inside PCs that are sold worldwide, so Award has little Asian exposure. This important point was made several times on the Award, SystemSoft, and Phoenix threads (by me). In addition, the company came in a little light from Europe last quarter, so it may have boosted this quarter. Award rose 25% yesterday because the company blew away the whisper expectations. USB will come on strong in the latter half of this year after the next Windows release and give the BIOS companies a revenue boost. The Micron design win is significant for Award and so is the Compaq PC Card win. The recently announced embedded products have incurred expenses to date, but revenue will be generated in the future. It's difficult to imagine any scenario where Award fails to grow profits 20-50% in the coming year. How much is Award worth? I'd pay V = (20 * OE + BV) / S, where V = Value, OE = Operating Earnings (after taxes), S = Shares, and BV = Book Value. Plugging in the numbers: Value = (20 * 5641 * 2/3 + 29,812) / 7710 = 13 5/8. Award is the best company in the BIOS business. Their revenues and earnings are growing fastest and the revenue/employee and profit/employee is highest. My money is wisely invested here and I expect the price to rise to 13 5/8 within 6 months. At that point, the analysts will issue a "strong buy" recommendation, which will be the cue for me and their important clients to sell shares at a big profit.