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Technology Stocks : INFORMATION ANALYSIS (IAIC) - YEAR 2000 Date Remediation -- Ignore unavailable to you. Want to Upgrade?

To: Matthew F. Kern who wrote (1605)	5/18/1998 10:13:00 PM
From: Sid Turtlman	Read Replies (3) \| Respond to of 2011

Matt: " IAI never traded at a PE of 1 before. I don't know if any of it's competitors trade at a PE of 1, if so let me know. This sounds like deliberate misinformation Sid. SHOW ME AN EXAMPLE OF A SIMILAR SITUATION!" I am not saying that it WILL sell at a P/E of one, even if most people know that earnings will disappear soon after 1/1/00, I am saying that it SHOULD sell at that price. Forget the stock market, just think of it as a transaction that you might be offered: Suppose someone offered to sell you his business which had a limited future, say, selling beer at the last ball game of the season, before the team moved out of town. He can prove to your satisfaction that he will make $500 that game. How much would you pay him to buy out his business? Ten times earnings, or $5000? No. Three times earnings, or $1500? No. What about one times earnings, or $500? No, I don't think you would even pay that, because he would get the money and not even work and you would be working for nothing. Depending on your financial situation, the value of seeing the game for free, etc., you might pay him $100 or $200 for that business, or well under one times earnings. That isn't crazy or even irrational. So why is an extremely low multiple of earnings which are very temporary so crazy? I think you are absolutely right about the road map beyond 2000. If IAIC can demonstrate that it has something proprietary, that it is more than a random collection of computer professionals, that it has something that it can sell at a decent margin after 1/1/00, then the stock could be a great buy. If not, then expect to be very frustrated in 1998 and 1999 as the company reports great earnings but no one wants to pay any multiple for them.

To: Matthew F. Kern who wrote (1605)	5/25/1998 12:16:00 PM
From: the dodger	Read Replies (2) \| Respond to of 2011

I'd like to clarify a few things to the folks on this thread... My position in IAIC...I don't have one at present...long or short. I was long on IAIC about 15 months ago...and doubled my $$$ in a very short period of time and got out...something like a month. I got a new car and a big screen TV out of the deal, so I've certainly got no bone to pick with IAIC. My only regret is, that if I'd held for another 3 months, I probably could have paid off my house !!! While I was long, I started to do some research on the Y2K situation... (yeah, a little ass-backwards, but that's life.) Here's what I found out, and some conclusions I reached... 1. At the time I got in, the two "biggies" were Zitel and Viasoft, and IAIC had a market cap about 1/10 of either of these. The math was easy...600 billion/3 Y2K companies = 200 billion in potential revenue...(no, I'm really not that simplistic...but there seemed to be plenty of $$$ to go around.) During that month, I found that there's lots of software companies offering Y2K solutions. I found about 100 more, and I really didn't look that hard...so I assume there's plenty more around. 2. I work very closely with a company called First Image. They print and mail statements for a large # of banks, brokerage houses, etc...These companies send their data to 1st Image via computer tapes in a host of different computer languages,, and they in turn "translate" (via software) them into a Unix-based environment. (Does the process sound faniliar?) You'd think that after several years of doing this, the process would be a "cake walk"...but it's not. Still lots and lots of foul-ups. It's all very labor intensive. There's no software "silver bullet". Everything must be checked and re-checked by hand. Yes, IAIC software will be a useful tool, but the vast majority of $$$ spent on the Y2k problem will go to programmers in the form of overtime. (This isn't my opinion, but rather the opinion of First Image's senior systems analyst...a remarkably sharp dude in his field.) 3. Any Y2K earnings should pretty much be viewed as "extraordinary"...(I've covered that in recent previous posts.) So...with that said...why my continued interest in the Y2K situation? Simple...because I think IT HAS THE POTENTIAL TO BRING THE BIGGEST BULL MARKET IN HISTORY TO ITS KNEES !!! No...not the problem...but the solution itself !!! Here's why... It's estimated that roughly 1/2 the market cap of the stock market is the product of merger speculation. But with the vast majority of programmers working on the Y2K problem, they'll be virtually no one left to "marry" those companies wishing to merge...(combining data bases, computer systems, etc...) Plus, some companies that feel a Y2K disaster is eminent (or too costly to fix) may try and find a buyer...thus making merger activity even more suspect. Thus, we could see a great deal of market cap erosion. Secondly, all the Y2K expense could add 1-2% to the inflation picture while taking a huge bite directly out of the bottom line at the very same time...a very dangerous combination !!! CONCLUSION: There's a chance to profit from the Y2K situation, but it'll probably not be as simple as buying stock in a company offering a Y2k solution. As the Y2K problem becomes more "real", money will tend to flow to those companies/sectors that are Y2K compliant or relatively unaffected. The real mission is to find those companies and invest accordingly. . the dodger