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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (1846)	8/21/1998 3:45:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 4509

Michelle, I disagree with your assessment for a couple of reasons. First, PSFT has consistently provided conservative forward looking estimates, and according to those estimates this company (along with virtually every other software company) is selling at forward P/Es of considerably less than their growth rates. To put the issue in greater relief, normalize the YPEG by dividing through with the YPEG of the S&P 500 (roughly 2.8) and you will see what I'm driving at. We are dealing with a temporary issue. Secondly, Y2K in the overall scheme of things is a temporary issue. Quick fixes to legacy code that does not function well will not obviate the need for better software down the road, and if companies are diverting money away from enterprise software in favor of fixing Y2K problems this will create pent-up demand which will drive up margins once these companies begin to upgrade. Your final scenario, one in which Y2K concerns caused a temporary increase in business has a modicum of truth, but even here, it does not affect the long term growth. We do not know for a fact that there is a secular change in the business climate, but even if there were, Y2K shifts would not reflect that change. As I see it, the real question is how many companies and institutions will need to upgrade their primitive ERP software in the next decade, and what ERP companies are in the best position to supply the software? When you take this longer view, you come to the conclusion that shifts in purchasing decisions are simply bumps in the road, much like shifting sales from one quarter to another. TTFN, CTC

To: Lizzie Tudor who wrote (1846)	8/21/1998 9:00:00 PM
From: Melissa McAuliffe	Read Replies (2) \| Respond to of 4509

Michelle, I think we're dealing with two question/issues here: a)is y2k slowing down current purchases while companies sink all their resources into trying to get their systems reading for blastoff on 1/1/2000.(it feels weird to write that date)...b)did y2k contribute to sales in the prior years that might not have been there otherwise. re b)...My personal feeling is that I can't see how y2k didn't help sales along. It probably gave companies that might have waited a few more years the incentive to just get it done once instead of upgrading existing software. BUT, even if this is true, one thing to remember about psft is that they have continually expanded their product lines, markets and geographies. PSFT should be able to see significant growth internationally due to the simple fact that their international revenues have not risen nearly as much as the U.S. and still are a fairly small percentage of their total on a comparative basis. Granted SAP is strong internationally but there have to be many deals out there for psft to win. They don't have to win them all. ((Speaking of SAP....here's something I just heard that could be good news for psft. I heard that they have lost many of their senior sales reps in the U.S. I hear they're filling the positions but the caliber of the reps isn't what it used to be. So this could make it more difficult for them at least over here.)) Back to psft, they expanded into the SCM and MRP market with new products and the acquisition of Red Pepper. They have the new products for the higher ed market which opened a whole vertical to them. They have more products which should enhance the retail sector. And don't forget their outsourcing venture which I believe started as HR and is now expanding to other areas. And their foray into the middle market. And who knows what else they are working on. I guess what I'm saying here is that if psft just sat back and thought they could continue to grow with the existing product line it would be a different story because I do feel that some #'s were artificially inflated due to y2k issues. With respect to a) companies delaying purchases to focus on y2k. I just don't think this is as much an issue for this sector as some people say. At least I've heard that. And I believe I've read it somewhere too.(therefore it must be true, right?<g>)But regardless, it's my personal opinion. To GD or whoever it was in an earlier post who said psft may have hit a bottom. I wouldn't necessarily agree that because it hit 31 and bounced back that it hit a bottom. When a stock hits new lows it's not always a good sign short term. I guess we'll just have to wait and see if 31 really does become the bottom. I'm of the opinion that we can't make that determination based on the fact that it bounced off it and then closed up on a down day. Then again, I'm hardly a market/stock price guru so who knows. Melissa