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

To: Len White who wrote (2358)	4/23/1998 12:23:00 PM
From: jim detwiler	Read Replies (1) \| Respond to of 3115

87 mill for 4th qtr 51 mill in licensing (60% of revenue) net income 10 mill .12 share in line cashflow up 15 million 3.7 million in sequential cash flow now over 289 million DSO's fine bookings stronger than anticipated with larger backlog growing pratical and predictable results comfotable with 1st quarter comfortable with 99 earnings of .54 bookings strong on all regions 3 new products did well this quarter (clearcase strong) clearquest positive reception without much competition idc acknowledged clearcase as the fastest growing platform software gowing in triple digit rose 98 started shipping IDC claims Rose has marketshare 3x greater than competition object oriented accepted by the big boys HWP, IBM, and Microsoft also Oracle shipping product with Msoft this quarter new product in performance test beta called darling NT this quarter were stronger than expected +40% Noth America, Europe, Asia all strong except Taiwan? Types of Clients financial services 10% chase manhatten fed ex jp morgan citicorp etrade defense aero lockheed martin boeing sabb united airline tech hardware hwp siemans sun micro ge cisco intel nec tech software cadence parametric netscape top 5 customer 15% of business well rounded questions Wendell from DMG nice quarter . . . sales force and quotas? 200 quota oriented people 110 are outside major reps, 75 indirect teleforce oriented . . . quota oriented salesforce scheduled to increase 20% and quotas expected to raised both will benefit from sales reps go for upto 3 mill average is 2 mill nt revenue continues to do well? rose 20 -25% of total product bookings 75% of that is booked via licenses, clearcase not as mature product less than 20% bookings on NT but strong growth within that area margins how are they doing looks like they will drop 400 basis points why? not answered too smoothly but along the lines of q4 was strong and q1 always weaker congrats again Shealia Ennis congrats on a really nice quarter asks about target customers and big financial mergers would hurt future demand? everyone trying to get into mission critcal customer oriented solutions like AT&T and citicorp so far most mergers are trying to keep legacy systems running while trying to build new applications for the new synergies created by the mergers (ie trend benefits Rational) any y2k slowdown in orders coming? No those are legacy systems that we don't focus on sales force attrition or territory reassignments abnormal? attrition in line admitted that he thinks we are trying to be more conservative than we need to be Goldman Sachs how do you measure Msoft relationship (rose and requisite)? tied to bookings on NT platform blah blah blah suites how are they doing? most of customers are buying suites this year vs last year it was just product oriented . . . this is good as customers see Rational as best in class products and no need to get one product here and one there margins under pressure via competition? customer confidence looks good Rose 98 taking fundamental marketshare away from competition all others are doing well Darwin or Darling beta test is best test product out there Last question DAin Wessel great quarter . . . cross training and how complete is it with Rational and Pure Atria? everyone now Rational person 80% confident emplyees can sell all of products only 80% because of technical issues always being upgraded with new products (ie this is complex as Sh%* software) . . . Java growing at triple digit growth!!! License margin should remain around 90% CEO willing to take two more questions BT Alex Brown gret quarter break out revenue growth of product? requirement management equals 5% bookings with triple digit growth modeling 20-25% bookings but growing faster than any competitors testing 40% bookings (Apex via Unix slow tied to less Unix software being developed) everything but Apex is doing really well 5 or 6 products) configuration clearcase standard on Unix really won't grow at tremendous rates and growing at triple digit growth only 10% pentrated into possible businesses