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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: Reginald Middleton who wrote (2202)	10/16/1998 12:46:00 PM
From: Wizard	Respond to of 6974

sorry thread, >>I am not saying that SEBL will not grow, I am saying that they are not investing into the future at the same rate that they have historically, your basis for this is because margins are expanding. here I disagree. SEBL has spent a ton on marketing and expensed it in the period incurred. Yet their margins are expanding still. >>When growth companies expand their net margins, they make a discretionary decision not to increase their long-term investments at the rate that their revenues are increasing. MSFT's net margins have expanded dramatically over the years. However, MSFT has a different (and inherently superior) business model than SEBL. MSFT is special and no application software company could replicate MSFT's model. >>If the share price is based on the historical growth trend projected out to the future and that growth trend is, in reality, altered then the share price will adjust. indeed. but the share price is not based solely on the historical growth trend, it is based on lots of factors. nobody I know is expecting SEBL to grow triple digits in the future. >>If you have not already read it, I have written a highly regarded and informative article on the topic, The Case Against Earnings I agree with what parts I've read but its nothing revolutionary. Even accountants admit that earnings are not representative of intrinsic value. Your points are valid but (and this is speculation) you seem to think that anybody that doesn't have MSFT's model is doing things incorrectly. My point is that MSFT is a unique case and not a model others can copy. However, there are still some valuable companies out there with good businesses. btw, I have no position in SEBL.

To: Reginald Middleton who wrote (2202)	10/16/1998 10:11:00 PM
From: Mike Buckley	Respond to of 6974

Reginald, >>When growth companies expand their net margins, they make a discretionary decision not to increase their long-term investments at the rate that their revenues are increasing. << I understand the point you make, but in the case of Siebel's acquisition of Scopus I would hope that at least a small part of the expanded margins is the result of three factors: 1)increased economies of scale; and 2)reduced cost of selling new products to existing customers by capitalizing on the Scopus/Seibel cross-selling opportunities; and 3)lower back-office expenses of the two former companies compared to those of the new, merged company. --Mike Buckley