- The Washington Times - Monday, July 23, 2001

MicroStrategy Inc., of McLean, has weathered tough times in the past two years.
Those rough times for the company may continue, if only for being part of the software sector, says Mark Murphy, an analyst with First Albany Corp. in Manhattan. The company reached a 52-week high of $37.13 last July and posted a 52-week low of $1.75 on April 3. The stock's price closed at $3.06 Friday.
The company laid off more than 800 of its workers over the past year. Last March, the SEC said the company's co-founders and its chief executive officer had to repay about $10 million, after overstating earnings reports between June 1998 and March 2000. And of course, there's the economic slowdown, which is affecting all stocks, especially those in the technology sector.
David Beck, an analyst with RBC Dominion Securities Inc. in Manhattan, says the company has made some progress by deciding to specialize in only one area of software.
"One year ago, the company was more scattered in its thinking, but they've focused more on business intelligence now," he says.
But he also says that news of the SEC fines still casts a shadow over the stock of MicroStrategy, and that may harm the company's stock.
"They've taken steps to improve their credibility, but haven't changed the major shareholders involved in this. Will some investors feel they can't trust them again? Unquestionably," Mr. Beck says. "If someone lies to you, you won't trust them as much as you had in the past. Investors are inherently skeptical. They're supposed to ask questions."
Mr. Murphy says that there are a number of steps that Micro-Strategy can take to make themselves more profitable.
"If they start minimizing unnecessary spending, with seminars and marketing and advertising, it might help them connect on a profit. It might draw some renewed interest from stockholders."
Mr. Murphy, who placed a "neutral" rating on the stock, takes the position that the plummeting software stock prices could be a good thing for investors.
"People are starting to ask where the bottom stock price is by October, all software stocks will have hit the bottom," he says. "But we are expecting an upswing in the fourth quarter 2001, so now is the time to buy them," he says.
Mr. Murphy says MicroStrategy is now being extremely cautious in its financial reportings.
"Their financial results are under intense scrutiny. They are going to make sure no mistakes are made again, and have people run a fine-tooth comb over them," he says.
Though Mr. Murphy says that while other software industry stocks have preannounced their disappointing second quarter results, MicroStrategy has not, and "that might indicate that a big disappointment for the company can be ruled out," he says.

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