Mr. Schwartz: I think it's a couple of things. I think there has been a rotation into software from some of the other technology areas. Certainly, the hardware areas were a little harder hit, so volumes are down quite a bit. Their Q2 numbers haven't been great, so I think there was a rotation into software. In general, the software models offer more revenue visibility than they have historically, and certainly they're better than some other areas in technology. That's due to strong maintenance revenue, and also a lot of companies now have a much higher component of recurring revenue. So you've just gotten a little more financial visibility into a lot of the software models, and they hold a little less risk relative to other areas in technology.
TWST: How is the business faring in the difficult economy? Maintenance revenues
are steady, but is that expected to continue?
Mr. Schwartz: I think for the stronger companies it is. Maintenance revenues are
hard to cut out and oftentimes they are fixed in companies' budgets. So I think
that the maintenance revenue should continue for a lot of companies. We have
seen some weakening in maintenance revenues for smaller companies, and I think
there may be some delineation between stronger companies and weaker companies.
But for the most part, maintenance revenues have held up, and I think that does
continue for the majority of software companies.
Tickers included in this excerpt: AVCT, CVLT, NOVL, SWI, SYMC, VMW
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.