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To: kimberley who wrote (672)	3/3/1998 4:40:00 PM
From: gerald tseng	Read Replies (1) \| Respond to of 1069

Kim: No, the gap is around 10.5-11. I hope we are not coming down that far. Too much technical damagewould be done!!! ISLI's fundamental definite not deserve that!!!

To: kimberley who wrote (672)	3/3/1998 5:28:00 PM
From: PCSS	Read Replies (2) \| Respond to of 1069

Just got off an ISLI Conference call hosted by Volpe, Brown Whelan. The main focus of the CC was a re-review and clarify the Q3 results. This is my summary of what happened: DATA DIRECT (1) without Japan (which seems to have bottomed and should show a turn-up within the next 2Qs) had a 7% increase and without currency conversion it was +20%, and (2) Forecasted deals slipped from Q3 to Q4 and the reasons why are currently being studied. Possibilities (a) General confusion caused by the ORCL, IFMX, SYBS and Asian problems, (b) Normal corporate 1Q budget setting problems/delays, (c) sales force failed to execute. LICENSE REVENUE DECLINE (1) Data Direct/Japan decline was as much as 75%, and (2) Older business (i.e.-accelerator, etc.) are not sold anymore therefore any Y/Y or Q/Q comparison isn't fair , this will be factored out of the equation in the future ......OTHERWISE (1) ASQ grew 25%, (2) License revenue was up 44% in NA and 44% in Europe (without curr. conv).....Looking forward overall License Revenue should be in the teens (possible 20%+) on a Y/Y growth Y2K PROJECT MARKETPLACE (1) Decisions accelerating although companies are still taking time to make decision, (2) ISLI is currently trying to close at least approx 3 small ($0-2 mil) and 6 medium ($2-6 mil) and 1huge ($20+mil). Y2K FACTORY (1) ISLI can now handle 15-20 lines of code per month after the front end planning and work in done and (2) ISLI has a Y2K Factory in Europe too. WHY THE SQL ACQUISITION ?? ISLI wants to be an Enterprise SCM/ASQ Vendor and their high-end clients wanted a Dimension-like product added to ISLI and this acquisition will more than address this and allow ISLI to go after and win more large high-end Enterprise-wide clients. 3Q DSO @ 101 days Q/Q increase problem ?? Was not really a problem, MCI (a large client) delayed paying ISLI till the beginning of Q4 instead of Q3. Without this the DSO was in-line. ALL analysts on the CC agreed. WHAT ABOUT FY99 ? (1) Looking for big time ASQ Business (25-35%), and (2) Service (20%+) and (3) DataConnect (20-25%), and (4) Increase in PVCS, and (5) DataDirect Comparisons will look better with the older non-existing business factored out, and (6) Y2K business is stepping up, and (5) Expenses have been lowered ..... BUSINESS LOOKS GREAT AND MANAGEMENT FEELS GREAT ABOUT IT AND WILL BE DRIVING INCREASES IN MARGINS AND EPS. MORE ACQUISITIONS ?? None specific now but as has been stated in the past slide-in complimentary acquisitions are always possible. ALL-IN-ALL this was a excellent review and clarification of Q3 results and a positive look forward for the future FYs. I hope I got it all and correctly