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Technology Stocks : Merant - MRNT (formerly MIFGY) -- Ignore unavailable to you. Want to Upgrade?

To: Arrow Hd. who wrote (436)	5/2/1999 8:20:00 PM
From: PCSS	Read Replies (2) \| Respond to of 461

The Sunday Times Article (UK Paper) May 2 1999 MONEY Merant is in line for an online recovery MERANT was created from the merger of Microfocus and Intersolv last year. Since then, however, the software-applications developer has not had a smooth ride. It has issued a profits warning and Martin Waters, the chief executive, has been replaced by Gary Greenfield, the former head of Intersolv. The shares naturally slumped on the news, falling from about 465p last September to 140p today - at one stage they dropped below 100p. I first profiled Merant two years ago when it was known as Microfocus. It was one of my top performers - virtually trebling from the recommended price - before the profits warning. Clearly much effort has been put into ensuring the business gets back on track as soon as possible. Recently the company provided evidence of progress with an upbeat trading forecast. Now is the time to reconsider the shares. The merger of the two companies seems entirely logical. Both work predominantly with the thousands of companies and government offices worldwide that use mainframe computers, many of which were installed more than 10 or even 20 years ago. The computers would be too expensive to replace with newer technology and Merant is on hand to continue to provide software solutions and services to keep them at the forefront of any developments. Merant should also benefit from Internet and e-commerce applications. Microfocus is strong in building process applications such as these, whereas Intersolv's strengths concentrated on handling data and building business-information systems. The profit warning last year, so soon after the merger, was a big disappointment. It was caused mainly by a weak North American market and a reduction in sales of products to solve the millennium bug. VERDICT: Greenfield has moved quickly to restore confidence and recently told investors the financial targets of the management teams. Revenue looks set to grow by 15% to 19% next year with pre-tax margins of between 10% to 13%. Longer term, he appears comfortable with 20% to 30% revenue growth and 15% pre-tax margins. If he is right, then the shares are extremely cheap, on a prospective price/earnings ratio of 11. They could comfortably double from here although much has to be taken on trust at this early stage, something the market may be slow to give. For higher-risk investors, though, use the opportunity to acquire a long-term holding. BUY. Michael P.S. - Maybe we can get past 13 this week !!!