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

To: Alomex who wrote (2473)	6/9/1998 4:54:00 PM
From: Bosco	Respond to of 3115

Dear Alomex - 1st, congratulation. Great homework. I am actually from the opposite side of the track - sad to say. I tried to catch the falling knife and ended up admitting myself to the endangered species group called "long term investors" <sg>. Having said that, I think RATL has a lot more potential than its past histories. I understand this is a risky proposition; however, I'd like to think its technologies are at the beginning of the life cycle and thus has yet to hit the sweet spot of its growth curve. I said risky because of several factors, like y2k diversion and barrier of entry etc. Having said that, only recently my co [can't name names, but big enough] has only begun to consider clearcase. I mean, this is not java-in-a-box, so the basebuilding can be laborous. Of course, there is no assurance that RATL will get the acct. So, your [implicit] points are well given. Technologies aside, it is crucial for mgt to pay attention to the business model, to the sales force and to the [pre and post] customer supports. I think it is difficult to compare RATL to ORCL, SAP, PSFT and BAANF because of the aforementioned points. I mean, RATL has yet to arrive at the Alpha Wolf position. But then, by the time it is there, it probably would be trading at a much higher multiples [and everyone would be screaming bloody murder how overpriced it were <g>] Best, Bosco

To: Alomex who wrote (2473)	6/9/1998 8:00:00 PM
From: spotter	Read Replies (2) \| Respond to of 3115

Well, it seems that the insiders (at least) are hopeful: biz.yahoo.com Some acquired, some exercised, but none sold. spotter

To: Alomex who wrote (2473)	7/27/1998 6:01:00 PM
From: Alomex	Read Replies (2) \| Respond to of 3115

Lets operate under optimistic assumptions and we get that revenue will start growing again and earnings will double, assume a 20 P/E and what do we get? $16.50 per share. Revenue was down sequentially.... How optimistic are the assumptions? Very. Revenue has not grown in ages and profit margin is stuck at below 18% for the last six quarters. For earnings to double, profit margins should reach 25% (double those of oracle, peoplesoft, baan). In other words, the optimistic assumptions are perhaps achievable but hardly surpassable Profit margins in latest quarter: 9.6% IMHO, this company is fully valued as it is.