Despite turning in a more than decent set of first quarter results back in October (CI No 3,273) and the launch of a new set of conversion tools last month, Phoenix-based software maintenance and year 2000 outfit, Viasoft Inc has seen its share price languish in the lower regions recently. The company hit a year low of $27.25 in March but managed to recover to reach a year high of $65.25 at the beginning of August. But good first quarter results that saw net income rise 142% at $3.8m on revenue up 86% at $26.1m, have not helped the company. Earnings per share for the first quarter of 1998 rose 122% to $0.20, but shares have still been trading only in the high $30-$40 range recently. Low investor confidence is not uncommon among Year 2000 companies at the moment, many of whom have witnessed depressed shares since October, and some analysts are suggesting that business is tapering off. Others appear to be waiting for evidence of lucrative conversion contracts from large end-user companies to be announced. Viasoft is planning to shift its focus towards license revenue and away from consulting and service work, a move that is partly to blame for the stock slump. Viasoft has also made noises that it is to address the potential $100bn market for making systems compliant with the Euro, the planned single European currency. Analysts at Deutsche Morgan Grenfell feel the financial outlook at Viasoft is rosier than most in the investment community think, however. After meeting with senior management last week, DMG feels that Viasoft has addressed important financial control issues, evidenced by the Q1 numbers. It also projects that Year 2000 spending at the majority of IT firms it monitors will be much more concentrated during the period of 1998-2000. Viasoft should be able to capitalize on that spending with a product cycle that encompasses virtually every area of Year 2000. Another bright spot for the company, according to DMG, is new vice president of development, David Lee who is believed to lead Viasoft into a strong position for its non-2000 products. DMG reiterated its buy rating on Viasoft shares and thinks its 12-month price target of $70 is an achievable goal. Viasoft shares closed at $38.0625 on Monday, up $1.3125.
