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Technology Stocks : Documentum (DCTM) Software -- Ignore unavailable to you. Want to Upgrade?

To: Ariella who wrote (389)	1/22/1999 3:32:00 PM
From: Tokyo VD	Read Replies (1) \| Respond to of 600

Ariella, The Merrill analyst was completely blindsided by the downward guidance, so I would give little value to the opinions offered. Tokyo

To: Ariella who wrote (389)	1/22/1999 7:31:00 PM
From: Michael Watkins	Respond to of 600

Ariella, I read the ML report and didn't find it negative in its conclusions. I only see a downgrade in revenue/earnings projections, not in their conclusion (accumulate / long term buy). Up to management to deliver, and their track record is very good. After listening to the conference call I do not detect anything of significant concern. Mention of sales force increases leads me to believe there is further upside. This is not box selling and productivity takes awhile. I do not buy the concern from some analysts over Y2K related delays in purchasing and CEO appeared to discount it. ML analyst asked about web apps speeding sales cycle and implementation timeframes - an astute question. Increasingly web centric focus is a good one in my opinion. We are seeing this in the market increasingly. Packaged application focus bound to provide returns - basically an enhancement of an already working strategy. Having said all this, I can't see significant 12 month risk and these price levels are excellent. All the money in Open Text, a company with much less sure footing (not saying they are going anywhere soon, but OTEXF is way overvalued right now), should flow over to DCTM now... ;) Our channel checks conducted throughout the quarter did not pick up on this end-of-quarter phenomenon, and though we did have to revise estimates we believe that the magnitude of our EPS revision (-15%) is clearly mismatched with the magnitude of DCTM's correction (-47% since 1999 began). We believe DCTM will weather this slight downturn in the market and exit 1999 with accelerating revenues. At $26 ¼ (or a P/E of 24x our revised FY 99 EPS estimates of $1.09) for revenue growth over the next year of 40% and EPS growth of 46%, we believe this company is a winner and a bargain. We reiterate our Accumulate opinion.