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Technology Stocks : PROGRAMMER'S PARADISE (PROG) -- Ignore unavailable to you. Want to Upgrade?

To: Cary C who wrote (24)	1/9/1999 4:50:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 2383

Cary, I am not sure you got your numbers completely right. I think that one of the reasons we are getting an opportunity at a low cost play is because the performance over the last year, particularly the profits, where not as good as the prior year. But I also think that that is already behind us, and the new directions the company is taking is getting it to better profitability. They have absorbed a number of acquisitions which broaden their customer list, and they have established a web presence with exploding sales (but still a low base). By the way, market guide is putting them together with the wrong group and thus the comparison are a little misleading. They market products of other software vendors, but unlike software, where a good program easily commands margins of 90% (what do few disks and a book cost?), PROG's gross margins are in the 12.5% to 15%. As they grow, I would expect them to be able to exercise some pressure on their supplier to improve their margins and possibly start at look at additional value added sales, but we will have to see how they execute their entry into E-commerce before we should get too excited. Zeev