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Technology Stocks : Red Brick Systems -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (231)	4/22/1998 11:20:00 AM
From: Barnhart	Read Replies (2) \| Respond to of 304

1) I saw it in last weeks quarterly report that Amazon was now a client. They may have just made the sale and did the PR Monday. 2) AOL??? Market Guide has a contract with AOL. I don't know anything about that. As for the scope of REDB deal with Amazon, I'm assuming it is just a sale of one database, nothing more. 3) Why do I think that Red Brick is worth $5.50? Good question. I'm just playing a lot on momentum. I've also looked at the quarterly report that tell me this company is not growing very much. They made 2 million revenue increase and 100 thousand in operating expenses. They also lost .32 a share. I'm buying again at < 6 because it is a fun stock and I'm hoping for another week like this one. Brian

To: Sam Citron who wrote (231)	4/22/1998 1:27:00 PM
From: Mark Finger	Read Replies (2) \| Respond to of 304

>>(3) REDB looks very cheap on the basis of P/S ratios compared to >>most software companies that are in rapidly growing multi-billion $ >>markets and that are not in danger of immediate extinction from >>MSFT. Can you explain please why REDB deserves to be selling in the >>single digits, even though it seems to have some very good customers >>who desperately need to decipher their customer databases. The data warehousing area may be growing quickly, but Red Brick is not. 20% sales growth is way below the median in this market sector. Further, the P/S ratio is currently 2. That is pretty high for a company that is only marginally profitable (on an operating basis). Those that have higer P/S ratios generally also have higher profit margins (generally at least 20% at the operating level before taxes). The other problem is that MSFT is going to start marketing SQLServer 7.0 for data warehousing. Since Red Brick is generally in the lower end of the sector, that means that they are directly in the center of one of Microsofts next target areas. I know that SQLServer will probably still be a joke for at least one to two major releases, but Microsoft tends to sell more on hype that on fact, and that could be a real problem for REDB.