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DATA POINTS: PC SOFTWARE P/E RATIOS.

What's a software company worth? Investment bankers sometimes use price-earnings ratios (the current share price divided by the most recent year's earnings) as a benchmark for valuing both public and private companies. P/e ratios rise or fall depending on Wall Street's mood swings; in mid-July, the median p/e for public Soft[yen]letter 100 companies was 28.1. However, the p/e ratio is often disregarded as an indicator of future value because it largely reflects historical performance. In fact, two-thirds of public Soft[yen]letter 100 companies-- including many with substantial market caps--have no p/e because they reported no earnings last year.
PC Software Company P/E Ratios*
 P/E Market Cap (millions)

Microsoft MSFT 47.0 $413,428
Adobe ADBE 61.6 $16,287
RealNetworks RNWK n/e $8,565
Intuit INTU 15.0 $8,304
Macromedia MACR 987.2 $6,124
Red Hat RHAT n/e $4,443
E.piphany EPNY n/e $4,423
Citrix CTXS 34.8 $4,246
Novell NOVL 19.3 $3,634
Network Associates NETA n/e $3,372
Symantec SYMC 19.4 $3,209
Autodesk ADSK 28.1 $1,406
Allaire ALLR n/e $1,251
Accrue ACRU n/e $929
Phoenix PTEC 102.0 $498
Inprise INPR 7.3 $388
MetaCreations MCRE n/e $369
MapInfo MAPS 60.1 $340
Great Plains GPSI 55.9 $311
SPSS SPSS 19.4 $292
Click2Learn CLKS n/e $287
NetManage NETM n/e $261
Interact SLGX n/e $259
Media 100 MDEA 146.1 $205
ClickAction CLAC n/e $182
White Pine WPNE n/e $177
Santa Cruz Operation SCOC n/e $175
NetObjects NETO n/e $168
Artisoft ASFT n/e $154
Learn2.com LTWO n/e $153
Concur Technologies CNQR n/e $151
Centura Software CNTR n/e $142
INSO INSO n/e $135
Insignia Solutions INSGY n/e $128
Smith Micro Software SMSI n/e $93
ScanSoft SSFT n/e $86
Timberline TMBS 9.2 $82
Ontrack Data ONDI 15.9 $80
Omega Research OMGA n/e $75
Pervasive PVSW n/e $70
Interplay IPLY n/e $69
Rogue Wave RWAV n/e $64
Previo PRVO 25.0 $51
Bitstream BITS n/e $42
ON Technologies ONTC n/e $41
Aladdin Systems ALHI 72.5 $34
Vizacom VIZY n/e $32
Diehl Graphsoft DIEG 19.1 $29
MathSoft MATH n/e $26
Eagle Point EGPT n/e $21
DataWatch DWCH n/e $19
eGames EGAM n/e $17
Micrografx MGXI n/e $13
American Edu. Cmptr. AEDU n/e $13
Omnis Technology OMNS n/e $9
Touchstone Software TSSW n/e $8
 * Ratios and market capitalization as of 7/17/00. n/e = no
earnings.


GIGA INFORMATION GROUP analyst Laura DiDio on Novell's recent sales decline: "They've got another two or three quarters to turn things around. Otherwise, Novell stands on the brink of becoming the Banyan Vines of the 21st century." (Quoted in Computerworld, 5/8/00)

IBM chairman Lou Gerstner on his willingness to pull the plug on IBM's money-losing PC division: "We'll do whatever it takes. We're not going to let this business be a continual drag on the company." (Quoted in Information Week, 5/15/00)

QED GLOBAL chief executive Ken Balick on Japanese attitudes toward failed startups: "Failure is not looked upon as a good thing. It's not like in America where you can bankrupt three companies and still go to a VC, and they say, 'Oh, you have business experience.'" (Quoted in Silicon Alley Daily, 6/1/00)

CITRIX SYSTEMS chairman Ed Iacobucci on his reaction to being squeezed out of the company he founded: "I put my heart and soul and spirit into this company. Like a parent, I'm very anxious... but the company has grown and it's at a stage where it's making its own decisions." (Quoted in The Wall Street Journal, 6/26/00)

COREL chairman Michael Cowpland on his personal reaction to his company's recent financial roller-coaster ride: "I consider getting bored the worst thing that can happen, so I make sure I'm never bored." (Quoted in The Wall Street Journal, 7/3/00)

SOFTBANK VENTURE CAPITAL managing partner Gary Rieschel on his firm's new investment perspective: "Before the crash we talked about market share and world domination. Now we have more prosaic concerns." (Quoted in The Industry Standard, 7/24/00)

MICROSOFT chairman Bill Gates on his company's long-term survival: "Sure, some year we'll blow it. I mean companies don't last forever." (Quoted in Business 2.0, 8/8/00)
Jeffrey Tarter
editor & publisher
Softletter
66 Mt. Auburn St., Watertown, Mass. 02472
Tel 617/924-3944 Fax 617/924-7288
www.softletter.com
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Publication:Soft-Letter
Date:Jul 24, 2000
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