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Technology Stocks : SDRC - Structural Dynamics Research Corp. -- Ignore unavailable to you. Want to Upgrade?

To: William B. Kohn who wrote (834)	8/13/1998 1:51:00 PM
From: Jerry Rush	Read Replies (1) \| Respond to of 946

You win, William. I've started bailing. Although they will likely grow to $530 million in sales in two years, dilution and additional acquisitions will likely keep earnings below $1.25. A PE of 15 = a two year target price of $18.75....a 40% return from here. And maybe they won't get that far. A reasonable profit margin for a company with acquisition expenses would be 8% max, imo. And 8% of $530 mill. revs = $42.4 mill earnings. Divide that by a probable 40 million shares (after 10% more dilution) and earnings per share would be only $ 1.05. Give that a PE of 15 and the two-year target becomes $15.75. Not a pretty picture. I thought I knew this company... and I was willing to be patient. I always said things take longer than anyone expects in the business world. But I never expected forever... I give up. I've started liquidating. ...That probably means this is the bottom...but I don't care, I want out. Oh, there is potential here. Always has been great potential. But the potential is being directed to "Build an Empire," not to enhance shareholder value. Maybe the future empire will be worth something... maybe only a huge hollow shell. Time will tell. Management will no longer speak to me. Maybe legal council didn't like me posting things from my conversations with the CFO. Dunno. All I know is, he hasn't talked to me in spite of many efforts. A buy-out as salvation? Don't count on it. Seldom happens. Besides, at first attempt, the company would probably spend $100 million on acquisitions (they have targets already). And maybe match that to acquire debt in order to look less attractive... and to preserve the empire. No, a buy-out won't be the salvation hoped for, imo. The best hope lies with the possibility of the Board actually knowing what they are doing. ...Perhaps there are profitable acquisitions awaiting. ...Perhaps there are more blockbuster deals waiting to be announced. ...Perhaps a stock-buy-back isn't in the best interests of the stockholders. ...Or, perhaps all this is Bull and the Board is only "Yes-Men" for Chairman Weyand. I don't mind a Board giving a vote of confidence to a CEO. In fact I like that... ...If it's deserved. But so far, no one has given me reason to belive it was. ...Were hard questions asked of management? ...Did they sweat? I doubt it. And that is what worries me. Back to the potential. ...Boeing and Aero is huge. ...The yet to be announced deal with the Dept. of Defense may dwarf Boeing and Ford. ...And of course the rumors of GM. ...Then there is the un-tapped market of Utilities. Yes Great potential. But wasted. Remember, this is the company that fired the guy in front of his daughter on "Take Your Daughter To Work Day." No feelings. Just build the empire. Jerry