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Technology Stocks : LEGATO SYSTEMS LGTO -- Ignore unavailable to you. Want to Upgrade?


To: Mark T. Heath who wrote (327)2/8/1999 10:12:00 AM
From: Platter  Read Replies (1) | Respond to of 1138
 
Article on LGTO..."An Enterprising Idea
Joseph Payne, Analyst, Hoak Breedlove Wesneski & Co.

Interviewed by Nate Hardcastle

Joseph Payne is looking for a few good enterprise software companies. The senior vice president and equity research analyst, who holds both an M.B.A. and a mechanical engineering degree, is witnessing a boom in the industry, thanks in large part to the Internet's proliferation of data transmission. Mr. Payne seeks the companies that enable the type of fantastic growth visible in today's information technology space.

The Inkwell: What is enterprise software?

Joseph Payne: Enterprise software is a broad term for the software that businesses use to run their applications and to store and use data. I divide enterprise software into four categories:

The first category is systems management software, the framework for a company's network. The software provides availability to the whole network, so if something goes wrong — if an application crashes, for example — technicians can more easily find and fix the problem. Companies in this category also provide services that integrate new systems into old ones. The investment environment in this sector is changing, based on the rising attractiveness of the distributed object model.

The second category is storage management. Companies now have unprecedented volumes of data, and they have to protect, store and manage all that information. Legato Systems Inc. (LGTO) and Veritas Software Corp. (VRTS) are the preeminent vendors of software for data protection and storage management. I have a "strong buy" rating on Legato and a "buy" on Veritas.

The third category is on-line applications to help businesses track their operations and report results. In that category I like companies that make software for analysis of business functions. My favorite of these is Hyperion Solutions Corp. (HYSL).

The fourth segment of enterprise software is data sources. This category consists of companies that build the structures in which businesses manage their data. My favorite company in that space is Pervasive Software Inc. (PVSW), which makes embedded databases for small- to medium-sized companies.

TIW: What's driving the enterprise software sector?

JP: The Internet has married computers and communications, and in the process has revolutionized the way companies do business. Corporations have realized that systems that take advantage of the Internet's ability to transmit data can help them cut costs, make smarter business decisions and increase efficiency.

I use the term "i.nets" to describe all of the different business uses for the Internet. Those uses include not only the World Wide Web, but also intranets — pieces of the Internet used internally — and extranets, which are Internet-based networks used to communicate with people and organizations outside of a company. Essentially, using i.nets effectively is what enterprise software is all about.

TIW: What does all of this mean for investors?

JP: The rise of the Internet has resulted in a new era for businesses and investors. Companies are recognizing the advantages that Internet-based technologies can give them, and the companies that build and manage those technologies should benefit. The information technology sector could become as large as the rest of the economy put together, and investors have started to realize that. The companies that I'm recommending design the software that makes that growth possible.

Legato, for example, provides storage management software that connects all of a big company's servers to one central back-up system. Legato's software works with different systems, such as Sun Microsytems Inc.'s (SUNW) Unix, Microsoft Corp.'s (MSFT) Windows NT and Novell Inc.'s (NOVL) NetWare. That flexibility is very attractive for big companies that may have different divisions with different types of servers.

Legato also provides services to help customers use its software. This is very complicated and fast-changing technology, so Legato upgrades its software every six months. The company also provides training and consultation services to optimize its clients' use of the software.

We estimate that Legato's earnings will grow 56% from $0.71 per share in 1998 to $1.10 per share in 1999, and $1.60 in 2000. That could drive the stock price up to $80 in the next 12 to 18 months.

TIW: What is the case for Hyperion Software?

JP: Hyperion is the leader in a rapidly growing market. The firm makes on-line analysis processing applications, also called OLAP. This is a brand new market, and we expect it to grow from $2 billion in 1997 to $3 billion in 1998. In the next three to five years, we expect the market to grow between $6 billion and $8 billion.

TIW: Can you explain what on-line analysis applications are, and how a company might use them?

JP: On-line analysis applications give a company's managers the data they need to make effective business decisions. For example, take a company that sells toothpaste through a chain of drugstores. Say management wants to get rid of the old whitening toothpaste to make room for a brand new kind of antibacterial toothpaste. The managers could use Hyperion's software to look at sales of the whitening toothpaste by region, by store, by price, by salesperson — combined with any other data they might want — to decide how much to lower the price in order to get it off the shelves while still making as much profit as possible.

TIW: But hasn't the stock suffered lately?

JP: Hyperion's stock has fallen to $20 3/8 from a 52-week high of $50 3/4, due to problems the firm encountered following its merger with Arbor Software. That decline in Hyperion's share price happened despite the fact that the firm still has a revenue growth rate around 30% — and I think that revenue growth will accelerate to the 40% to 50% range going forward.

I estimate that the company will earn $1.30 per share for the fiscal year ending in June of 1999, and $1.70 per share the following year. I think the stock could hit $30 over the next 12 to 18 months.

TIW: Why do you like Pervasive Software?

JP: Pervasive has changed the database business. The company makes databases that are embedded in systems for small- to medium-sized firms. The key to their products is that they require zero attention from manual labor. That's a big deal for smaller companies that don't have technology departments. And the databases sell for less than $1,000 — an attractive price for smaller companies.

I anticipate earnings of $0.31 per share for the fiscal year ending in June of 1999, up from $0.18 in 1998, and $0.45 for June of 2000. That could drive the stock's price up to $25 or $30 in the next 12 to 18 months.



To: Mark T. Heath who wrote (327)2/9/1999 11:19:00 AM
From: w2j2  Read Replies (2) | Respond to of 1138
 
PALO ALTO, Calif.--(BUSINESS WIRE)--Feb. 2, 1999--

Legato Systems Outlines the Information Utility, Announces
Strategic Partnerships, and Demonstrates Storage Area
Network (SAN) Solutions

At a worldwide press conference held today, Legato Systems, Inc.
(NASDAQ:LGTO), a leader in the enterprise storage management software
market, detailed its roadmap and partnerships designed to advance
storage networking toward the vision of the Information Utility.
"Our enterprise customers rely on their information systems just
as much as they rely on their electrical and telephone systems," said
Lou Cole, chief executive officer of Legato Systems, Inc. "Those
utilities provide seamless, uninterrupted access to their services,
managed in a way that is transparent to the customer. Similarly,
Legato's storage management products will enable Storage Area Networks
to provide uninterrupted availability of data, managed in a way that
is transparent to the user, thus creating the Information Utility."
The Information Utility will enable enterprises to achieve robust
data protection, high data accessibility, and continuous operations in
SAN environments. These benefits will be provided through the
application of efficient resource utilization, service level
availability management, SAN-based data movement, and self-healing
storage techniques in a policy-managed framework. Legato's
announcement today outlined products, initiatives, and partnerships
aimed at achieving these benefits in three important stages.
"Compaq plans to incorporate Legato's solutions to support the
Compaq Enterprise Network Storage Architecture (ENSA), which makes
storage a more flexible, shared resource throughout an enterprise,"
said Darren Thomas, vice president of the Multi-Vendor Business Unit
of Compaq Computer Corporation's Storage Products Division. "Compaq is
a leader in the market with high-performance, fully configured SAN
storage solutions. By working together with partners such as Legato,
we offer fully automated SAN solutions that give customers the ability
to achieve increasing levels of return from storage in heterogeneous
environment."
"CLARiiON and Legato are working closely together to deliver
backup and recover solutions that will deliver uninterrupted access to
data and applications," said Mark Vargo, director of solutions
marketing at CLARiiON. "This alliance can help customers realize
benefits from their SAN implementation in a much shorter timeframe."
In the first stage, fairly simple SAN environments are created to
solve specific storage management problems, such as more efficient use
of network resources and management of application availability. For
these customers, Legato NetWorker today can provide LAN-free backup
for mission-critical database and application servers, with Legato
SmartMedia(R) providing the added benefit of dynamic sharing of tape
drives across heterogeneous environments. Customers ready to deploy
these advanced capabilities can be assured of interoperability with
SAN hardware through the Legato SAN Ready program. In addition,
FullTime Cluster(TM) provides the ability to manage application
service levels, giving administrators the flexibility to minimize both
planned and unplanned system downtime.
"The combination of FullTime Cluster and FullTime Data with
Legato's enterprise storage management products brings unequaled
management capabilities to SAN environments today," said Dave
Malmstedt, senior vice president of worldwide operations at FullTime
Software. "As we work together to fully exploit SAN capabilities, we
will enable our customers to fully realize the incredible potential
that storage networking brings for improving their business
processes."
As SANs begin to mature and customers begin to deploy more
complex storage networks with increasingly intelligent storage
devices, the need for more efficient use of server resources and
transparent management of data protection processes will arise. Legato
is addressing this evolution by replacing the "host-centric" storage
management model with a "storage network-centric" model. Legato will
employ the Celestra(TM) architecture, which provides the industry's
first true server-less backup for the SAN market, gained in last
week's acquisition of Intelliguard Software. Celestra enables new
applications, such as server-less backup, SAN-based file replication
and mirroring, and transparent Hierarchical Storage Management (HSM).
Legato will work with other leading SAN vendors to deliver these
capabilities on intelligent storage platforms, creating key products
to manage the Information Utility.
"Celestra has reached the marketplace precisely as the market for
data movers is exploding," said George Wilson, chief executive officer
of Intelliguard Software. "Celestra will help optimize Fibre
Channel-based Storage Area Networks -- and help move this advanced
technology further into the enterprise, delivering the benefits of
standards-based, 'server-less' technology to the heterogeneous
environments of Fortune 2000 corporations. This is a huge and growing
opportunity. There are 300,000 corporate sites with over 200 gigabytes
of storage capacity, and the market for data movers is substantially
larger."
Finally, as SANs mature further, proactive management techniques
will be required to ensure SAN scalability and fully realize the
potential of the Information Utility. The self-healing storage
capabilities of Legato GEMS will be extended to the management of the
SAN network infrastructure. This will provide a policy-managed
framework for the management of both the SAN infrastructure and the
data contained in the SAN, giving administrators unprecedented control
over the quality of service provided by the storage network.
Providing comprehensive SAN solutions will require industry
leaders to work closely together. Today, Legato also announced
strategic partnerships with CLARiiON, the Advanced Storage Division of
Data General Corporation, a leading supplier of disk arrays for the
open systems market, and with Brocade Communications, the leader in
the Fibre Channel switch market. Like previously announced
relationships with 3Com Corporation and MTI, and StorageTek and Box
Hill, these partnerships are aimed at developing and bringing to
market solutions required by customers who are deploying SANs to
improve their business and data management processes. Refer to
separate announcements, "CLARiiON and Legato Systems Join Forces to
Speed the Deployment of SANs" and "Brocade and Legato Systems Partner
to Offer Integrated Storage Network Management," for more information
on these exciting strategic partnerships.
Legato also announced today that it has joined the FibreAlliance
as a charter member. Sponsored by EMC Corporation (NYSE:EMC), the
FibreAlliance is a consortium of twelve Fibre Channel hardware and
management leaders. The goal of the FibreAlliance is to establish
standard methods for management of Fibre Channel-based SANs.
"Legato's product initiatives continually improve the data
protection, data availability, and operational transparency of our
customers' environments," said Nora M. Denzel, senior vice president
at Legato Systems, Inc. "Legato's concept of an Information Utility
takes early SAN solutions to the next level, where fault tolerant
storage operations ensure that management of storage is fully
automated and policy-driven for maximum customer return on their
storage investment. Legato is committed to developing solutions that
conform with industry standards, ensuring interoperability for our
customers."
"We have witnessed explosive data growth as the Internet has
become critical to daily business operations throughout the world,"
said Chris Gnanakone, president and chief executive officer, at
SeaLink Information Technologies, Inc. "Legato's concept of the
Information Utility provides end users improved access to this data
across their organization. This is critical to our e-commerce
applications. We look forward to seeing the SAN products that will
bring the benefits of the Information Utility to our business."
"The vision of enterprise SANs, providing universal access to
data, is solid and becoming a reality for the distributed network.
Underlying this robust storage network architecture is a sophisticated
management infrastructure comprising data movement, access, sharing,
performance, data protection, disaster tolerance, and quality of
service," said Michael Peterson, president of Strategic Research
Corporation, Santa Barbara, California. "The strategy and roadmap that
Legato is announcing today will provide that sophisticated management,
exploiting the intelligence that will be distributed throughout the
storage network, and enabling customers to achieve the benefits of the
Information Utility."

Legato Certified SAN Solutions

Attendees at today's worldwide press conference also viewed live
demonstrations of Legato SAN solutions, featuring LAN-free backup and
restore in a heterogeneous environment, with Windows NT and UNIX hosts
connected to a tape library using Legato NetWorker Power Edition and
Legato SmartMedia. Demonstrations also included remote SAN backup,
using Legato NetWorker Power Edition backing up data via Fibre Channel
bridged over ATM; FullTime Cluster failover, with load-balancing
across multiple systems in a SAN environment; and server-less backup
using Intelliguard's Celestra architecture. Partners participating in
these demonstrations include ADIC, ATL Products, Brocade, CLARiiON,
Compaq, Computer Network Technology (CNT), Crossroads, Emulex,
Exabyte, FullTime, Gadzoox, Intelliguard, JNI, MTI, QLogic, Quantum,
Silicon Graphics, StorageTek, Sun, and Vixel.