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Technology Stocks : Phoenix Technologies (PTEC) -- Ignore unavailable to you. Want to Upgrade?

To: John B. Dillon who wrote (2921)	11/23/1998 5:48:00 PM
From: Mark Brophy	Read Replies (3) \| Respond to of 3624

All earnings are one time events. I consider all earnings and losses to be "one time" events. There's no such thing as an aberration. Lou Gerstner of IBM has acknowledged this fact and no longer reports charges to earnings when the company restructures. Phoenix was able to sell the former publishing division and part of the printer software division for high prices because they managed those businesses well and had the foresight to realize that the IPO market would grossly overvalue most emerging companies. The company has been unable to duplicate their previous successes because they've mismanaged the company in the last couple of years. Their major initiative was the Intel deal that hasn't borne fruit. It was supposed to establish the economies of scale necessary to crush Award, but it greatly increased R&D spending and forced Phoenix to buy out Award at a high price, as well as setting themselves up for bullying by the trustbusters. The best way to measure growth is to compare shareholders' equity per share at 2 widely spaced points in time. Phoenix had $89.6m in equity 2 years ago and there were 18.3m shares, or $4.89/share. Today there is $125.3m in equity and there are 26.3m shares, or $4.77/share, which indicates that they've made no progress in the last 2 years. You can play all the analyst games you want and the stock price might react in the short term, but shareholder value must be produced for the stock price to rise in the long term. I've owned Phoenix off and on since 1992. I bought my current shares the day after the merger announcement and recently increased my position because the company is grossly undervalued. I expect the IP group to be spun off in 2-3 years with a market cap around $300m. It may seem far-fetched now, but Xionics also had similar market cap shortly after it went public. SystemSoft was started by a disgruntled former Phoenix employee and enjoyed a similar lofty valuation.