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Technology Stocks : Concentra (CTRA) -- Ignore unavailable to you. Want to Upgrade?

To: nick nelson who wrote (8)	7/23/1998 3:29:00 PM
From: tnnm	Read Replies (2) \| Respond to of 19

I picked up 1000 shares this morning at 5. Looking over the press release I was impressed and acted quickly without DD. Upon going through their financials for the past five years, I became a little concerned. I contacted their CFO, Alex Braverman (781-229-4660 or alex@concentra.com) and asked a few questions. 1) Teradyne deal is only worth $150k so far but will build up "significantly over the next 6-8 months." 2) He then described the contents of the $0.59/share as mostly representing new royalties (about $7.9 million) and high sales of the SellingPoint product. 3) SellingPoint has been on the market for about 2 years now, and is beginning to catch on like gangbusters he says because, "the market is now maturing and we have one of the best product positions." I asked who their biggest competitor was, and he replied "Trilogy out in Texas..." but he suggested that they don't represent much of a threat. 4) I asked about a projection of the next 6-8 months and he assured me that this is only the beginning. Some big sales deals are in the works and they should close during this period, allowing them to continue to report outstanding numbers. 5) ST Liabilities: The current ratio is pretty low at around 0.6, but Mr. Braverman told me that $3.7 million in cash does not appear on the B/S because they arrived on July 1st. I did not ask if this came from A/R or someplace else as if it came from A/R, it would not affect the current or quick ratios. 6) Finally, he told me that long term debt of $600k, which were used as capital equipment leases. He did not mention the interest rate (although my calculations from the I/S and B/S suggest they are paying something like 12%), but he told me that they are working on paying down the debt as quickly as possible. So in summary, I am in for the long term. I am excited about this company's future, however I am a little concerned about their current financial structure. There probably is not too much need for concern however as the current structure is nothing more than a reflection of the hard times that are now past the company. I am encouraging friends and family to invest small amounts in this company as I could easily value this stock at $50 (conservatively) - $100 (liberaly) while the downside potential seems relatively small. I'd be happy to share my valuation calculations with anyone who's familiar with WACC and CAPM calculations. (By the way, P/E for the industry is 57.6 according to MarketGuide - that alone can justify a price of $100 if Mr. Braverman's statements about future sales come true.) -Tony