Enterprise Software News – 11 May 1999
4
security risk, protecting the environment from intrusion,
enabling secure communications and managing the
environment for users via rights and privileges. Business
looks healthy early in this 2Q 99, but management remains
very cautious about the closure rate of the pipeline, given
the nasty surprise in 1Q 99. Other opportunities include a
partnering with hardware vendors (including Compaq) to
produce a lightweight “security appliance” with integrated
firewall/security management for the small office/home
office (SOHO) market and internet service providers
(ISPs).
n Mercury Interactive; MERQ C-1-1-9
Price EPS FY99 (E) EPS FY00 (E) P/E CY99x 5 Yr Growth (E)
$30.19 $0.79 $1.04 38 35%
Mercury rolled out the red carpet for investors, bringing
out its entire senior management team. CEO Amnon
Landan led off the discussion by outlining MERQ's three
pronged strategy: 1) align automated testing solutions with
trends in corporate IT, 2) offer a complete and integrated
solution and 3) continue to utilize its strong distribution
channel, which is currently brings in 50% of license
revenue. Other presentations reinforced our research that
the software testing space remains under penetrated in both
mature markets such as Packaged Applications and
emerging markets such as E-commerce. The company
continues to focus on increasing customer loyalty by
providing superior customer service and increasing sales
force productivity (a 75% win rate) through selective
hiring and careful management. Management remains
extremely bullish on its prospects in the E-commerce and
Packaged Application markets and expects to exit FY99
with approximately 50% of total revenues from E-commerce
(up from 35% in 1Q99). Y2K testing should
decline, as expected, throughout the remainder of FY99
and stabilize around 10% (down from 15% in 1Q99) which
will consist primarily of mainframe based testing.
Week's Biggest Movers
Weekly Movement from 3 May to 7 May
Rank Ticker Closing Price Opening Price % Change
1 GPSI $34.94 $30.56 14.3%
2 MERQ $30.19 $28.19 7.1%
3 COGN $24.38 $24.06 1.3%
4 MSTR $17.44 $17.25 1.1%
5 SYBS $7.81 $7.75 0.8%
6 CA $42.50 $42.69 -0.4%
7 AXNT $9.31 $9.38 -0.7%
8 DCTM $15.19 $15.63 -2.8%
9 BMCS $41.50 $43.06 -3.6%
10 PSFT $12.81 $13.69 -6.4%
11 IFMX $6.72 $7.25 -7.3%
12 ITWO $31.13 $33.88 -8.1%
13 NETA $12.13 $13.25 -8.5%
14 ORCL $24.50 $27.06 -9.5%
15 OTEX $34.63 $39.88 -13.2%
Merrill Lynch
[AXNT, GPSI, MSTR, ORCL] MLPF&S was a manager of the most recent public offering of securities of this company within the last three years.
[AXNT, BMCS, DCTM, IFMX, GPSI, MERQ, MSTR, PSFT, ORCL] The securities of the company are not listed but trade over-the-counter in the United States. In the US, retail sales and/or distribution of this report may be
made only in states where these securities are exempt from registration or have been qualified for sale. MLPF&S or its affiliates usually make a market in the securities of this company.
Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce,
5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend.
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