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

To: reba kenith who wrote (2869)	8/4/1998 4:45:00 PM
From: The Rancher	Respond to of 5232

UpChuck Phillips wrote a report. here you go... Dow Jones News Service via Dow Jones NEW YORK (Dow Jones)--Computer Associates International Inc. (CA) shares were up 5% after Morgan Stanely Dean Witter analyst Chuck Phillips hinted in a research note that the recent "bloodletting" in the stock could be overdone. Computer Associates' shares have lost close to half their value since the company warned that the indirect effects of the economic turmoil in Asia, slower mainframe sales and customer decisions to defer purchases to deal with the year 2000 issue could slow growth in its mainframe software business. Computer Associates guided analysts to expect revenues from its mainframe software operations to be about flat sequentially and down about 15% year-over-year in its fiscal second quarter, which ends in September. The company said the slowdown in its mainframe software operations, which account for about half of its total business, should extend into the December quarter as well. Computer Associates' shares have skidded since it offered the outlook, which it did when it released its fiscal first quarter results. The shares - which hit a 52-week high of 61 15/16 and closed at 57 on July 21, the day before the announcement - fell as low as 30 5/8, a 52-week low, Monday. In a research note, Phillips said "the stock has broken through all valuation parameters that mattered in the past and the bloodletting is unprecedented even for an enterprise software stock." The analyst noted that Computer Associates' shares fell 22% in the first nine days after it warned of its last shortfall, in December of 1996, compared with 47% in the nine days since its most recent outlook. In December 1996, Computer Associates missed the quarter and lowered guidance on revenue by 10%, Phillips said. By contrast, this time around, the company actually did meet earnings expectations for its first quarter, but warned of slowing growth for the year, "which equated to ...guidance of a 5% reduction in revenue and 8% reduction in earnings," he noted. "We're simply in a much less forgiving environment," the analyst said. He added that "when the stock finally bottomed at 25 during the last shortfall, investors made 128% in the stock over the next 12 months." CA's NYSE-listed shares were recently up 1 1/8, or 3.7%, at 31 7/8 on volume of 8.3 million, compared with an average daily volume of 2.6 million. Earlier the stock was as high as 32 11/16. Morgan Stanley's Phillips said investors trying to determine whether Computer Associates has a viable business should keep in mind that the company generated more than $1 billion in cash flow from operations last year - "more than any other software company" other than Microsoft Corp. (MSFT). In addition, he said, the company's products are "ingrained" in the mainframe world. He noted that he has "yet to find an IBM-compatible mainframe without at least one CA product installed on it." Moreover, "even CA's oldest mainframe products are still used to run mission-critical systems," Phillips said. The analyst believes Computer Associates "ought to figure out a way to profit" from the "unprecedented level" of mainframe capacity about to ship in the marketplace after International Business Machines Corp. (IBM) starts shipping new mainframe hardware products this fall. Phillips also said that if there is a silver lining to CA's troubles, it may be the opportunity for the company to become less dependent on a few large deals at the end of the quarter. He noted that the company "is moving in that direction since it plans to beef up its consulting operations." -Joelle Tessler; 201-938-5285 (END) DOW JONES NEWS 08-04-98

To: reba kenith who wrote (2869)	8/4/1998 8:28:00 PM
From: blankmind	Respond to of 5232

go back a few posts and see the contract ca won.