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Technology Stocks : RATIONAL SOFTWARE- BUY OR HOLD -- Ignore unavailable to you. Want to Upgrade?

To: Hans-Erik Eriksson who wrote (2874)	3/12/1999 5:24:00 PM
From: ratlong	Read Replies (1) \| Respond to of 3115

UML World looked pretty 2-bit. 10 vendors, didn't look like much going on. While I guess it is important for Rational to do from a thought leadership position, seemed to be a solid waste of money.

To: Hans-Erik Eriksson who wrote (2874)	3/30/1999 11:23:00 AM
From: Asymmetric	Read Replies (1) \| Respond to of 3115

A Rare Turnaround Success Story - Rational Software (From Online Investor) Six months ago we wrote about Rational Software (Nasdaq:RATL) in a spotlight entitled "Turnaround Taking Hold?" At that point there were only hints that the turnaround was for real, but with the company now posting solid growth and the stock price up over 60% since then, the question appears to be answered. Let's see what the company has achieved and what it will need to do to sustain the momentum. Rational Software makes products that allow software developers to create complex programs using "building blocks" instead of writing code line by line. As demand for graphical "object-oriented" development products blossomed, the stock soared from a split-adjusted $3 in 1994 to $44 by late-1996. But the stock faltered in 1997 due to a series of expensive acquisitions that diluted earnings and created operational difficulties for the company. Revenue growth slowed and profits turned into losses while Rational struggled to integrate its acquisitions of SQA and Pure Atria. Competitive pressures from Oracle added to the uncertainty surrounding Rational Software's future, and its share price fell as low as $7 a year ago. But the company's close working relationship with Microsoft gradually began to pay off and Rational returned to profitability in the past five quarters. Turnaround stories rarely pan out, especially in the tech sector where short product cycles and a rapidly-changing technology environment make it difficult for companies to regain their stride. But with software stocks, when business clicks their huge profit margins can make for rapid earnings growth and very generous valuations from Wall Street. So now that Rational Software is back on track, the growth potential is impressive. For the FY99 fourth quarter ending in March, the analyst consensus is for a 76% increase to $0.21 per share. For the coming year, analysts look for 42% growth to $0.89. Ten of eleven analysts have at least a Buy rating on Rational Software. New product introductions have been a big part of reviving Rational's growth. In January the company introduced integrated product bundles (suites) aimed at different types of software development teams. The bundling strategy is expected to drive upgrade business from the installed base and enhance penetration of the large enterprise market. Rational Software needs a strong reception for these suites from software developers if is to sustain its turnaround momentum. Next month's earnings report will be pivotal in gauging the initial market response. 3/29/99 8:02 PM