Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Melissa McAuliffe who wrote (2520)	10/6/1998 12:35:00 AM
From: AlienTech	Read Replies (1) \| Respond to of 4509

Software Cos.' Shares Rattled By Unknowns By Maria V. Georgianis NEW YORK (Dow Jones)--Software companies, the heretofore brightest earnings growers within the technology sector, are getting rattled by what troubles may be around the corner. Concerns about how global economic slowdowns and the Year 2000 computer glitch could slow down growth rates for the sector have recently pummeled several stocks to new lows. The enterprise resource planning, or ERP segment, of the software market has been particularly hard hit by analysts' ratings downgrades and lowered revenue growth estimates. ERP company Peoplesoft Inc. (PSFT) lost about one-fourth of its market value Friday after Goldman Sachs & Co. and Morgan Stanley Dean Witter downgraded the stock and reduced growth rate estimates. More analysts followed suit Monday. Some of the concerns that analysts are citing have been overhanging the sector for awhile, but have been resurrected lately as the market has taken a more volatile turn. Several analysts in recent days have made judgements about the entire sector's long-term growth rates. BT Alex. Brown & Co., for example, Monday lowered its earnings growth rate estimate for the ERP software sector to an average 25% from 30% to 33%. The firm's cuts in its growth forecasts included Peoplesoft, J.D. Edwards & Co. (JDEC). Baan Co. (BAANF) and SAP AG (SAP). "This change reflects deterioration in the worldwide macroeconomic environment, continued uncertainty regarding the impact of the Year 2000, downside earnings revision risk, industry pricing pressures and the likelihood of continued multiple compression," BT Alex. Brown analyst James Moore explained in a research note. Since late spring, Putnam Investments senior vice president of equity research Frank Walsh said he's been anticipating some tapering off of growth from ERP software companies because capital spending may be slowing down and the sector is entering a more mature phase of growth. "We think the growth rate (of ERP software companies) will be 20% to 30% going forward on revenue, down from a 45% range," Walsh said. "It's a pretty healthy growth rate, but given where the (stocks') valuations where, they had to adjust to these lower growth rates," he said. Noticing that global economic weakness was cutting into profit growth of multinationals such as Coca-Cola Co. (KO) and Gillette Co. (G), Walsh said he wondered how these firms and others with slowing earnings growth might ratchet down their capital spending, which includes technology products. "Capital spending in technology has been at a very high rate for the last seven years," Walsh said, estimating 10% to 15% annual growth during this period. (MORE) DOW JONES NEWS 10-05-98 02:52 PM