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Technology Stocks : Clarify - upside to EPS -- Ignore unavailable to you. Want to Upgrade?

To: corporal spewchunks who wrote (1008)	4/7/1999 7:50:00 PM
From: Trader Dave	Read Replies (1) \| Respond to of 1062

A post of mine from yahoo on what's going on: The market psychology for enterprise software stocks is as bad as I've seen it. Let's look at several of the largest enterprise software names and see what their q1 results and outlook looks like. SAP, PSFT, ORCL, HYSL, NETA (not enterprise but threw it in anyhow), DCTM, HNCS, CA, etc etc etc. They've all blown up! all of 'em!!! They are all blaming y2k. That is the biggest crock of #### i've heard. I believe we are at the beginning of a major cycle transition in the enterprise software business. It's a transition not seen in about 12 years. 99.8% of institutional money managers haven't experienced this type of transition and wouldn't know how to play it anyhow. We are at the end of the erp/back office client/server cycle. Who were the leaders in the last cycle, the central processing back office cycle? Dun and Bradstreet, Systems Software associates, Pansophic, American Software, etc etc. Powerhouses today huh? Today's powerhouses such as SAP, PSFT, Oracle and Baan were the client server back office powerhouses of the 1990's. their business is done growing. Growth will NOT return at the end of the year. (Im NOT saying erp is finished, it's just not a GROWTH business any longer.) The ERP guys had a drug induced major stimulant to their late 1990's growth --- Y2K. Hey! We can get this cool new client server stuff and solve our y2k problems! better do it quickly, gotta be done by mid 1999! they saw business that normally would have come in in 1999, 2000 and 2001 come in earlier creating artificially high growth in 1995, 96 and 97. Bottom line, the game is mostly over for back office and erp. For that matter, I am skeptical of any software application that saves money in 1999. Integrated front office solutions that support the web as a channel of customer interaction (see eFrontOffice) are the future. these applications are the keystone to e-commerce infrastructure. It is a market that is probably 3 to 6 times LARGER than the back office market and has a much higher strategic impact. Thesis points: At the beginning of the cycle, the new companies, the leaders of the next generation are small. When the old legacy leaders stumbles, all companies in the sector get decimated. As the new folks keep putting up the numbers, they will separate from the legacy vendors and get fair valuations to their growth rates. As their dominance becomes more apparent, the valuation will expand further. I have NEVER seen a leader in a legacy market become a major factor in a new market. Legacy vendors are invariably weighed down by supporting their existing customers and the deadly need to create new products that are "compatible" with their installed base. I call this the anchor of the installed base. Wait until you see the half assed abap junk from SAP in two years. I'm sure it will be as powerful as SSAX's BPCS for UNIX! Today I was adding to positions in CLFY, SEBL, and MERQ, all badly damaged today and I suspect all will post very respectable results. How long before the investment community recognizes the long term importance of these companies? I don't know. They will be recognized eventually. The y2k excuse will be here for a while. Conventional thinking is driving people to stay away from all enterprise software companies. Investors with deep knowledge and a willingness to look towards the long term can often reap decent rewards. Conventional thinking creates conventional returns. (Today my unconventional thinking, lead to uncoventionally poor portfolio results.) :-( That's my perspective. TD