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

To: Hans-Erik Eriksson who wrote (2322)	4/16/1998 9:14:00 PM
From: ratlong	Read Replies (2) \| Respond to of 3115

Hans, I am currently attending the annual Rational NAFO meeting in AZ, they invite partners to attend. While Visio may take the low end modeling market (I don't know if I necessarily share your concern about a serious threat there), neither Visio nor any other company is going to compete with the product line that RATL has put together. They have done a very good job in "nudging" their positioning, market segmentation, pricing, integration and value proposition to represent the lifecycle products. I have to be very careful and very generic about what I write because elements of what they have covered are probably confidential. Several people made the connection between the name tag and the thread, I felt like I was a journalist saying "off the record." Bottom line is my long term confidence in this stock is soaring. That does not mean it will be at 15 next week and 30 the week after- that is not my investment here and that is not my position. Long term, this company is so solid on almost every front, unless the market collapses or people give up on software, Rational is going to have a hard time losing. Granted they must continue their momentum to build confidence in the community (financial and technical), but you and I shared a conversation here a couple of months ago about the "chasm" gap and that "processes" were the bridge for people to understand the products. Well, they are doing exactly that. Objectory will play an increasingly important role. I took over 40 pages of notes and came here with serious questions to be answered for my business and for my portfolio and I have seen one solid presentation after another. The Requisite group is flying high. My gut instinct is that this is the hottest product in their stable. Their business unit manager was so confident in his presentation. The testing suite is rock solid. I missed the CM piece, unfortunately. The Rose presentation was the only area where I felt a little uneasy- they still don't seem to be a conhesive and conherent group and their strategy did not seem as rock solid as the others. They have formed a dedicated business unit to bring together a Windows Suite and when they do, there will be little stopping this company from a technology or market leadership standpoint. Their executive management team and product management teams were here- very solid. I mean very solid, cohesive, supportive and very confident. Levy was at ease- using humor as well as serious morale to respond to questions. The executive management team sat for 90 minutes and answered open questions from the group. Their field sales organization appears to be extremely well organized and their commitment to partners, while I still see some gaps here, has improved nonetheless. This needs work- they have just put someone into the role and while he appears to be totally committed, he did not appear to have worked through all of the specific issues facing the channel partners. I think they will pull it together though, he did seem very committed. Finally, the field reps and district managers seem to be very committed. They may have lost some people to acquisition attrition, but those that remained seem pretty solid. Knowledge transfer across product teams and former corporate colleagues seems much better than it was 6 months ago. While day traders may move in and out of this stock, I have seen nothing but reinforcement of my prior posts about their ability to leverage their market leadership into an overwhelming position of strength. To bring up Geoffrey Moore again (sorry), Rational is entering the bowling alley and have market leadership with every bowling pin- bring on the tornado! Hans and others, I realize this is a generic post without facts- I usually hate those. However, I cannot give much more than this until I take time to assess what is proprietary and what is public. Once I thoroughly do and I may check it out with people at RATL, I will share what I can. Bear with me.

To: Hans-Erik Eriksson who wrote (2322)	4/16/1998 10:13:00 PM
From: Cesare J Marini	Respond to of 3115

Hans-Erik, I agree that Visio's entry into the market space is not something that should be ignored or taken lightly, but let me explain why I'm not very concerned about it. Rational offers a complete product line that aids in the development of software, from planning right through to quality assurance. If I were looking for a tool set that could offer a complete set of features to help me develop software, Rational would figure highly in my decision. Visio's strength is in their drawing and planning tools. If I were a programmer who wasn't quite ready to invest in Rational's tool set or didn't need what they offer, I would look at what Visio had to offer to help me with my diagramming needs. But I'd still need other tools for the rest of the process -- developing and testing the code, etc. That's where Rational's strength lies. Visio may have some success in capturing developers who only need modeling help, but Rational simply has more to offer to people who need to get professional software developed. By the way, I really admire the fact that you're obviously an educated investor who is aware of what's happening in the market segments in which you've invested. Seems like there aren't that many people left these days who are.