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

To: Larry Brubaker who wrote (305)	1/18/1999 1:02:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 2383

Larry, I actually think that their expansion outside of their traditional software to some hardware is a "natural" (and even suggested such in one of my earlier posts as a possible future strategy). In short, they have distribution channels, in lieu of just distributing what PROG happens to have they are now moving to the mode of distributing to their customers what they actually need. Since e-commerce does not require excessive inventories, but just good search engines and "relationships" with suppliers that happen to have what the customers need (but have no means of reaching these customers as PROG does), it is an excellent strategy. Furthermore, with these new products, the cost of printing and mailing catalogues will be eliminated (part of the current cost of goods sold) thus increase in margins. Initially, however, I expect these increases in gross margins to be eaten up by investments in SG&A to improve presence on the web (and the recent web improvements as well), create the required "relationships and advertise their web presence. As a result, I do not expect a "J" curve in profitability and earning for at least another three quarters (but constant improvement over the next three quarters), then we could see a "blow up in earnings in the fourth quarter of 1999, IMHO. The market, I believe will anticipate this and the price should reflect these changes in PROG. Zeev