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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Robert Sloan who wrote (13089)	3/27/1999 8:48:00 PM
From: LakesideTrader	Read Replies (1) \| Respond to of 14631

Hope this helps: Informix Poised to Rebound Eric Singer Over the last three years, investors have continually bid up the shares of enterprise software makers. But a peak at the recent charts of the leading players hints at an about face. PeopleSoft (NASDAQ: PSFT), Baan (NASDAQ: BAANF), J.D. Edwards (NASDAQ: JDEC) and now Oracle (NASDAQ: ORCL) have sold off sharply in recent months. Cut-throat competition, market saturation, and nagging Y2K concerns have resulted in a mass exodus from the sector. Many companies in the sector have reported disappointing financial results. Oracle looks especially troubled. On March 11, it said sales grew just 7% from year earlier levels. Investors are now questioning whether the company can thrive in a difficult enterprise market environment. Earnings estimates were cut, and shares plunged by over 30%. With over $2 billion in quarterly revenue, Oracle is less nimble than it was a few years ago. New product introductions targeting either existing or new markets have less of an impact on Oracle today. Informix Oracle's disappointing results, coupled with the overall weakness in the enterprise software market, have cast a shadow over Informix Corp. (NASDAQ: IFMX). Its share price has remained under considerable pressure despite reporting a very strong fourth quarter, marked by 18% total revenue growth and earnings per share of $0.13, $0.02 ahead of consensus estimates. Informix has successfully completed a two-year turnaround and is very well positioned to leverage off of its installed user base. With very strong operating momentum and several key new product introductions over the course of this year, Informix can successfully navigate the turbulent waters of the enterprise software market (a point lost on investors as they continue to bid down the company's shares). Informix is currently trading at a cash-adjusted market capitalization of 1.5 times projected 1999 revenue and 12 times fiscal 2000 earnings estimates. This despite being one of few enterprise software companies that exceeded estimates in its last quarter. The stock also looks cheap in light of the company's bright outlook in 2000 and 2001. New product introductions are targeted at the fast growth markets of e-commerce and data warehousing. These segments of the enterprise software market continue to garner a large share of information technology budgets at large corporations. In the data warehousing market, the release of Centaur and Yellowstone will mark key product introductions in 1999. Centaur handles transaction system management, including e-commerce, and Yellowstone will strengthen Informix's core data warehousing capabilities. To address the burgeoning market opportunities in the Intranet and e-commerce, Informix has set up a division known as 'i. Informix.' The first product out of this division, i. Reach, was introduced at the start of the first quarter. This software package provides for management of corporate Intranet sites in a simple and cost effective manner. The process of updating and retrieving information can be handled without IT support. The company's second promising product, Bazaar, which is scheduled to be released in the June time frame, will enable corporations to address targeted merchandising, scalable transaction management and data analysis. Bazaar will be able to handle large volumes of data and a high rate of information change. Bazaar will enable e-commerce companies to improve their operating efficiency through a smoother order flow and improved analytical capabilities. Informix will be able to leverage off of its existing installed base of retail and telecommunications companies. Informix has done an impressive job at re-aligning its operations. In addition to strong top-line growth, it has significantly expanded operating margins. In the fourth quarter, Informix's operating margin was 12%. Further improvement can be expected. Inventory levels and DSOs were also at comfortable levels. Continued increases in top-line momentum coupled with improved operating margins will lead to healthy earnings gains. Informix's share price has been held down by industry related concerns. In particular, there is speculation that Informix will miss consensus estimates of $0.04 for the first quarter. While the quarter is not yet complete, Informix appears to be well-positioned to meet expectations. Thus, concerns over Informix's business appear to be macro related. Prior to entering the quiet period, Informix management had expressed confidence in their business in general and the opportunity to close out the quarter in particular. This is, of course, no guarantee. Bottom Line: While the enterprise software market is clearly experiencing softness, Informix's robust new product introductions coupled with a nimble corporate culture will enable the company to excel. Investors have the opportunity to accumulate Informix shares at a point of pessimism. The stock closed Thursday at $7.56, up $0.44. Watch for further gains.