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Technology Stocks : Open Text -- Ignore unavailable to you. Want to Upgrade?

To: gc who wrote (727)	3/12/1998 10:04:00 PM
From: dzzhang	Read Replies (2) \| Respond to of 1195

Open Text Rewards Patience, Fund Manager Says: Bloomberg Forum /* We will see OTEXF run into its $30s in the next few weeks -- ''As people understand the market better, they'll see that Open Text's fantastic 100 percent revenue growth is the beginning of the growth curve,'' */ Toronto, March 12 (Bloomberg: 8pm) -- Open Text Corp. is finally starting to reward investors who took part in its initial public offering two years ago. Open Text shares have risen 46 percent in the past three weeks while it's won large contracts from Nissan Motor Co., Ford Motor Corp. and Provident Financial Group Inc. The stock touched a 52-week high of 21 this week in Nasdaq Stock Market trading. The performance has been paced by the growing popularity of Open Text's software, which allows employees to share, retrieve and search for documents on the Internet or an Intranet, an internal corporate network that uses Internet-based tools. ''Open Text has 75 percent market share in the Intranet work- flow market and is beating the stuffing out of large U.S. companies like FileNet Corp.,'' Duncan Stewart, portfolio manager of the Navigator Canadian Technology Fund, told the Bloomberg Forum. ''If someone believes in the value of the Intranet, these guys are one of the two or three strategic players out there,'' said Stewart, whose fund owns an undisclosed amount of Open Text stock at an average price of 11.41. Waterloo, Ontario-based Open Text reported its first quarterly profit in its fiscal second quarter ended Dec. 30. Before a charge, the company, which reports in U.S. dollars, had a profit of $152,000, or 1 cent a share, compared with a loss of $3.8 million, or 23 cents, a year earlier. Revenue more than doubled to $6.8 million from $3.1 million. The company is expected to earn 8 cents a share in the year ending June 30, the average estimate of six analysts polled by First Call Corp. In fiscal 1997, it had a loss of 78 cents. A Different Focus The company's success validates a decision by management in late 1996, less than a year after its IPO, to shift its focus from its original mandate as a search-engine software maker that competed against rivals such as Digital Equipment Corp.'s Alta Vista unit and Yahoo! Inc. Open Text changed because it believed the market was becoming too crowded for a product offered to computer users at no cost. Yahoo! and its rivals make revenue by selling space on their popular Web sites to advertisers. Open Text's strategic shift was painful for investors who purchased shares in the IPO for 15 each. After touching 23 during the first day of trading in January 1996, the shares declined to a record low of 4 1/8 in September 1996 amid concern it wouldn't find a profitable market niche. The company is winning over investors by signing contracts with major companies like Nissan and Ford that are rolling out its products to thousands of employees, suppliers and customers, Stewart said, adding Open Text's installed base of LiveLink users recently surpassed 500,000, compared with 60,000 a year ago. ''As people understand the market better, they'll see that Open Text's fantastic 100 percent revenue growth is the beginning of the growth curve,'' he said. The stock's recent appeal has also been buoyed by talk that Open Text's growth could make it a takeover target, Stewart said. A possible suitor could be Netscape Communications Corp., which signed an agreement in June to distribute Open Text's LiveLink software with its SuiteSpot product. ''Netscape has been rumored,'' Stewart said. ''They have cash and now that they are giving away their Netscape Navigator (browser software), they need a cash-generating business.''