ith the new year must come new financial predictions-or at least old predictions dusted off. As we say in the financial world, these forecasts are worth the amount of money you paid for them.
No one needs to state that 1997 was an extremely volatile year for technology, but there will always be big winners and big losers. Here are some of technology's 1998 macro trend
s and some potential individual winners:
The year 2000 issue will take up the minds-and wallets-of most IS departments in 1998. The major beneficiaries will be the year 2000 consulting and tools companies. My favorite choice remains Compuware, a leading applications development software and consulting company that also happens to be a leading year 2000 vendor.
Distributed systems management will always be a big issue. The best products and leading companies include BMC Software and Computer Associates. Stable cash flow and good technology may beat out the hype and potential of the highfliers in 1998.
As communication services are commoditized and made cost-effective, integrated services will become an issue for customers. WorldCom-post MCI-merger-will be a world leader in integrated services that will likely take advantage of its competitive position and partnerships.
I am also a big believer that cable companies have started to get financial religion and will make strong progre
ss in increased profitability and cash flow in 1998. Larger bandwidth will be required to offer faster data services and video-on-demand. In this area, cable has a huge advantage over the telcos.
I am focusing on Tele-Communications Inc. and its spin-off, @Home, the cable modem service provider.
Internet business models will continue to defy logic, but some of the smarter companies will make real money. My best idea here is Cendent, the former CUC International that merged with HFS. Its cost of sales continues to decline as it leverages its membership base.
Near year's end, investors as well as IS managers will look to get back on their internal software-development schedules again. Companies such as Rogue Wave and Versant, both leading development tools software companies, should garner some attention again after being beaten down in 1997.
The new year may start off with a whimper if the Asian crisis is more than a hiccup. If so, investors in the restructuring AT&T and the stable IB
M may look a lot smarter by year's end than most other tech investors.
Not the most exciting list, but the world looks nervous to me.
William Schaff is chief investment officer at Bay Isle Financial Corp. in San Francisco, which manages the InformationWeek 100 Stock Index. You can reach him at
bschaff@bayisle.com
.
ith the new year must come new financial predictions-or at least old predictions dusted off. As we say in the financial world, these forecasts are worth the amount of money you paid for them.
