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

To: Larry Brubaker who wrote (235)	1/13/1999 11:08:00 AM
From: Crossy	Respond to of 2383

Larry, just look how PCCC recovered nicely today - PROG should do same. You are absolutely right - valuation does offer a nice cushion against corrections. At least we got some help against exuberance on the downside <g>.. best wishes CROSSY

To: Larry Brubaker who wrote (235)	1/13/1999 12:11:00 PM
From: William T. Katz	Read Replies (2) \| Respond to of 2383

Analysis/Questions on PROG: Did some more DD last night and here are some of the highlights: 4.83 million shares out 3.3 million stock float 1.79 of that is held by institutions It's possible that some of the institutions have taken some profits with the recent price increase, but we still have a very very small float if the institutions have not dumped their holdings. This gives us a very stable base. Technically, the pullback from spike to 18-19 has been on much lower volume than on push up. Does this not bode well for forming a base? Read the annual report if you get a chance. There is a lot of information in there about the specifics of the business. Their revenue is approximately split between their catalog operations and their corporate reselling. Catalog operations provide them higher margins and are mostly US based. Note that it apparently costs them nothing (and they actually make some money) from their catalogs because of paid ads. This is a big plus since it also provides "free or profitable" advertising for their internet sites. They get over 50% of their revenue from European based operations (particularly Germany). Their business is growing rapidly in the European markets and they have made acquisitions over the last 3 years to increase presence in Germany, France, UK, Netherlands, Italy, etc. Note that Amazon.com had also made moves to acquire internet booksellers in UK and Germany. Makes me wonder why PROG doesn't have these mostly corporate resellers establish a more direct internet sales channel. PROG has established a direct e-commerce business-to-business system, ISPeCos, to more or less replace the inefficient ordering departments of businesses. This system should have been migrated to US over last 2 quarters. But unlike US market, it looks like Euro operations aren't targeting the little/individual programmers. So I would think there is opportunity there (or simply let them order through US web site and route distribution to euro subsidiaries). PROG has been looking at using internet/intranet to expand their business for the last 3 years. This is not a company that has rushed to implement an internet strategy but they have been systematically using technology to streamline their business. I've noticed that the cash position decreased from Dec 31 97 quarter. As far as I can tell, they used the cash to decrease their liabilities since that has dropped substantially from Dec 31 97. Since they have been profitable for all 3 quarters in 98, they are using that cash for some things... perhaps ISP eCOS and web site although I cannot find mention of those expenditures. Some one double check on cash/cash flow/liabilities... PROG seems like the dominant player in developer markets. As a computer scientist, I'm familiar with PROG and was happy with their involvement with Microsoft in Developer Days. As many businesses are forced to adopt some internet strategy, the developer community is forced to grow and the required tools are also increasing in number. This will drive demand for PROG products. This company has made steady growth through acquisition and good execution from their existing businesses. Net income decreased from 97 figures and I'm still trying to figure out why. The press releases indicate it's because of a shift to lower margin business (i.e. expansion of corporate reselling which is to big companies buying bulk purchases at discount), but if your business to the little guys is also increasing and your aren't losing* money from corporate reselling (which in 97 they weren't) then why should profits decrease if sales are ramping nicely? Thoughts anyone? Aside from the question above, I felt good about my initial investment and added some more on the huge downdraft opening. I'm looking for solid companies that will be helped by the developing internet/intranet infrastructure and PROG fits the bill. The price continues to look very low given their financial condition, continuing sales strength, and dominant position in developer market. -Bill