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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: uu who wrote (10028)	3/24/1998 5:18:00 PM
From: limit	Respond to of 14631

Addi, Regarding the sorrow you feel for the Illustra employees I agree. But I got in at $21 under the former "mgmt". Can you feel my pain also. I just want a small piece of Phil, not IFMX Long till the end

To: uu who wrote (10028)	3/24/1998 5:54:00 PM
From: Mark Finger	Read Replies (2) \| Respond to of 14631

The lawsuit is interesting, but if you really look at the real situation, the problems started after the merger. The bulk of the restatement problems were for 1996--after the merger. If you look at the sales growth for 1995 over 1994, it was over 35% even after restatement, which was pretty good. The profits showed a decline ($38M vs. $48M), but this can be reasonably explained. First, IFMX tried to make a fixed margin of sales in profits, and if the sales would have been lower, then they could have trimmed some expenses (slowed hiring, careful monitoring of other expenses) to keep profits growing. Further, 1995 was a "pooled" year, showing the effects of Illustra being unprofitable (I believe that Illustra showed at least $5M or more in losses in 1995), while 1994 was not a pooled year--just Informix profits. Another problem with this suit is that a major reason for the Informix problems is that the sales group was shifted too soon to Universal Server, and did not emphasize the older products. There was a story circulating that by early 1997 nearly 40% of the sales force was new hires, and that they were ONLY TRAINED to sell Universal Server. In other words, the management was convinced to the Universal Server was going to be an immediate success. The following is my speculation. The question is who convinced management to make this rush to Universal Server (for the sales force). Would it have been IFMX people. I doubt it. I really suspect that it was led by Illustra people who recognized the future possibilities of their product, but were simply too optimistic and too persuasive about their views. In other words, a major part of the problem could have been created by the very people who are the class of the plaintiffs in this suit. The other thing to remember for the plaintiffs is that only lawyers win in suits like this. The plaintiffs will be lucky to get pennies on the dollar, because if they win a big award (on the order of the actual losses they will claim, plus punitive damages), they will actually get nothing, because that would bankrupt IFMX.