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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Caroline who wrote (14840)	10/26/1998 11:15:00 PM
From: Mama Bear	Read Replies (3) \| Respond to of 18691

"Many of the shorters on SI believe that Y2k is a hoax and that Y2K stocks are a scam." That's a pretty generalized statement. It's as extreme as saying that Y2K is the greatest crisis mankind has ever faced and one should buy gold bullion and C-rations aplenty to make sure your stay in the bomb shelter will be survivable. How about some middle ground on the issue? Y2K is a problem that will cost just about every company out there significant profits? That it will distract managements enough that growth won't be particularly large? Can KEA be a good company, while ZITL/Matridigm is, shall we say, less than above board? Can it be that there is no 'silver bullet', but a bunch of programmers going line by line? Can it be that while profits are likely to suffer, that the world won't stop running? Barb

To: Caroline who wrote (14840)	10/26/1998 11:22:00 PM
From: Roger A. Babb	Read Replies (4) \| Respond to of 18691

Caroline, many of us on SI are skeptical of some of the y2k claims because we are legit software professionals. Yes, there will be some problems with old COBOL programs and the like. Most will be fixed or replaced in time, a few will slip through the net. There will be no power outages on January 1, 2000 but it is possible that your power bill may be delayed and/or wrong. And many of the y2k companies, ZITL and VIAS for example, have made big money for their management and promoters. Not through revenues and earnings, but by selling stock. A process that is continuing and will likely accelerate into 1999 for many other y2k companies. For a short seller with enough software industry experience to identify the likely winners and losers, it is like shooting fish in a barrel. Winners: KEA, EDS, IBM, SAP, orignal program and equipment vendors Losers: just about all other y2k companies

To: Caroline who wrote (14840)	10/27/1998 3:45:00 PM
From: BelowTheCrowd	Respond to of 18691

Caroline, I don't think Y2K is a hoax. Lots of effort is going into correcting the problem. I have seen it all around me, and have been on the fringes of some Y2K projects. The hoax -- for the most part -- lies in the claims of those companies who pretend to have some sort of magic solution to the problem which is going to provide huge revenues from a client base which is so desperate that they'll pay any amount for it. Bottom line is that the "proprietary tools and methodologies" provided by most consulting firms (and I'm including the biggies like Andersen, as well as small players) aren't all that special or all that helpful in most cases. This should be nothing new to anybody in the information technology business. Consulting firms ALWAYS claim to have some unique tool or methodology, but for the most part the performance differences between them is minimal and usually can be traced to the quality of the people assigned to the project rather than to any specific tool they bring with them. For the most part, these firms are able to provide high-quality, short-term labor, trained at identifying and fixing Y2K problems. It's not really a sustainable business and for the most part it's not all that lucrative unless practiced on a fairly massive scale. Even the big guys who have much more diverse businesses are saying that they expect a major falloff (15-20%) in IT consulting after mid-1999 due to the Y2K falloff. If that's the case for them, it's likely to be absolutely devastating to many of the smaller players. Kind of hard to justify paying some high multiple of sales for a company with zero or minimal revenues and no clear future beyond the next 18 months. mg