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Technology Stocks : RATIONAL SOFTWARE- BUY OR HOLD -- Ignore unavailable to you. Want to Upgrade?

To: THAI DUC TRAN who wrote (2217)	3/4/1998 3:13:00 PM
From: ratlong	Read Replies (2) \| Respond to of 3115

Folks- Not a downgrade, but DMG lowered earnings estimates. They met with RATL management yesterday before the quiet period and saw something they didn't like about numbers. It is not a formal downgrade. Remember where Wendell Laidley at DMG is coming from- he jumped on the bandwagon last time and downgraded and in the last CC he focused on "sequential growth of the license revs" being lower- did not look at the fact that the NT was increasing faster than expected, which would make up for the gap in Unix revs. He went after Levy about deferring service revs and Levy responded that he planned to fulfill expectations because he could count on stronger than expected performance on services- thus a backlog. Levy stammered somewhat (maybe raising WL doubts) but eventually responded that bookings were strong in product licenses and predicability was key so they backlogged. Laidley's overall tone was negative and skeptical while Sophia Change from Goldman and Sheila ? from H&Q were very positive. If this has a ripple effect and we see the latter two moving estimates down, we could be in trouble, but the DMG analyst revising estimates shouldn't be a major warning to us. Just some thoughts...