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Technology Stocks : Computer Associates -- Ignore unavailable to you. Want to Upgrade?

To: DEER HUNTER who wrote (2746)	7/26/1998 11:34:00 AM
From: rupert1	Read Replies (1) \| Respond to of 5232

DEERHUNTER: More of the same - NYTIMES 26/7/98: I lifted this from the Yahoo Board: _______ Previous Next -> Message 3600 of 3602 Reply NY Times article lguo88 Jul 26 1998 9:38AM EDT July 26, 1998 Computer Associates' Drop Stuns Managers Related Articles The New York Times: Your Money By SANA SIWOLOP n Tuesday, Stephen Granoff, an analyst for the John Hancock family of mutual funds, was fairly confident that the stock of Computer Associates International would soon reach a record high. Buoyed by good earnings prospects, the shares of the company, a giant in business software, had been sailing upward for months, and on Tuesday were trading in the high $50s. But Granoff, like many investors, was stunned on Wednesday when the stock opened at a distressing $39.50. It had lost 31 percent of its value overnight after company executives warned that the Asian economic crisis was cutting into the earnings of its large multinational customers, which, in turn, would put a six-month brake on Computer Associates' earnings. Despite quarterly earnings that were slightly better than expected, investors fled, apparently alarmed by a warning that raised as many questions as it answered. The stock ended the week at $39.0625. The selloff struck hardest at mutual funds with big bets on the company, which is based in Islandia, N.Y. Several large fund companies were major holders of Computer Associates stock when they most recently reported their portfolios, most notably John Hancock, Massachusetts Financial Services and Putnam Investments. Fund companies typically report holdings only twice a year, making it hard for investors to know which stocks their funds hold without calling the manager. At the end of March, Putnam reported holding 38.2 million shares, scattered among a number of funds. If Putnam still holds that many, it has a bigger stake in the company -- 7 percent -- than Computer Associates' chairman, Charles Wang, who held 37.6 million shares on July 6, according to the company, including a controversial stock grant it made to him two months ago. Putnam declined to discuss its interest in Computer Associates stock, as did MFS. But elsewhere, the ranks of big believers may be shrinking. Hancock, which has been a big investor in the company for at least 10 years, decided last week to trim its position slightly, Granoff said. "We just weren't comfortable with the uncertainty surrounding the stock," Granoff said. "There's uncertainty as to who their largest customers are -- it's tough to get the names out of the company. "And it's also very difficult to determine why they decided to come out with this information right now," he added, referring to the warning about Asia. "We're only three weeks into the new quarter." And what of the stock grants that Wang and two other executives received in May -- together worth $1.1 billion at the time -- as a bonus for tripling the company's market capitalization in three years? Lingering investor resentment over the grants may have exacerbated last week's selloff. But Granoff played down the resentment. Technology companies commonly hand executives lucrative stock and option packages early on, he pointed out, while Computer Associates postponed the rich reward until after the executives had achieved something specific, getting the stock price to meet or exceed a preset threshold over an extended period. Still, exactly how the stock made it above the threshold has been the subject of recent speculation. A shareholder lawsuit filed on Thursday contended that the company had been issuing overly rosy statements about trends in its business. A Computer Associates spokesman said the company had no comment on the suit. On the positive side, one Morgan Stanley analyst, Chuck Phillips, bucked the tide and raised his rating of the stock to "outperform" on Thursday, saying it looked cheap compared with those of competitors ________ Victor