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Five analysts and top management from eighteen sector firms examine the Document & Database Management Software sector in this special 93-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info407.htm

TWST: Chris, what trends or new developments do you see over the next year or two?

Mr. Shilakes: I agree with Bob and Brendan on their points. I think there was a period when the hype was exceeding the reality, and I think it’s helpful for both the customers using the software as well as the vendors to allow the reality to catch up with the hype. So I think we will see continued enhancements on the existing, healthy areas of the business. But I think there are a couple of more promising areas that are on the horizon, that are just starting to form right now. One area is the area of Web services. And it’s hard to say whether these are features of broader platforms or stand-alone offerings themselves, but generally, Web services represent the next generation of software delivery. Of course, the role of application servers sitting alongside data servers is a levering point for these Web services, and it basically allows software enhancements to be accessed over the Internet. Whether it’s application logic or security or analytics, all these features can now be accessed remotely rather than having to be installed locally, and that means that the databases that will be serving up this kind of content are going to have to be able to handle much richer content. We started to get into that with the Internet with JPEGs and streamed media and so forth; I think business logic being packaged, stored and procured over the Web is a big area of opportunity going forward. That dovetails into collaborative commerce, which I think was done an injustice the last year or two by some overhyping of B2B exchanges and so forth, but it really evolved into things like “supply Webs” where you can leverage existing relationships between partners, customers, manufacturers and so forth. Customers can really mix and match that connectivity, as Bob alluded to, using XML or tried and true PIPEs, such as EDI. So I think the move is toward collaboration, and really levering the Web is the backbone for that.

TWST: Chris, is there anything you get excited about today, or is there no need to rush?

Mr. Shilakes: I would agree with Bob in that I don’t have a stable of buy-recommended stocks right now. I do think that there are a couple of names you should keep your eye on this fall. Perhaps as these stocks come in with the broader tape, you can start to get more aggressive and build some positions. In particular, I do think a name such as BEA Systems (Nasdaq:BEAS) is very interesting. The other name I’d cite is Mercury Interactive (Nasdaq:MERQ), which is an automated testing and monitoring software provider. As I said earlier, anything that can save your development dollars and your development mind power for more proactive deployment of projects is definitely warranted in this market. Both Mercury and BEA have smaller average deal sizes that are more palatable in this budgeting environment. ROI tends to be more rapid here than in many other spaces, and I think both management teams are fairly savvy and have been around for quite some time. So they’re “battle-hardened” and they’re ready for a protracted ground war here. So when you look at those two stocks, be selective. Mercury somewhere in the low $30s would be where I would want to look at getting more aggressive on that name. That also brings it down into a low 30s p/e, and we believe that starts to approximate its growth rate over the next couple of years. Both of those would be similar valuation stories at just a short move down from current levels.

This special issue includes:

1) Document & Database Management Software - In an in-depth (10,300 words) Analyst Roundtable, Robert Austrian, Managing Director at Banc of America Securities LLC, Brendan Barnicle, Vice Principle at Pacific Crest Securities and Christopher Shilakes, First Vice President at Merrill Lynch & Co., examine the outlook for the sector including, long term trends, developments in technology and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at seven sector firms asked market insiders about the ability of management teams to create shareholder value.

3)Storage Hardware & Software Stocks - In an in-depth (2,600 words) Analyst Interview, Nitsan Hargil, Senior Analyst at Friedman, Billings, Ramsey & Co., Inc. examines the outlook for the sector and shares specific stock recommendations.

4)Enterprise Software - In an in-depth (2,000 words) Analyst Interview, Greg Vogel, Managing Director at Banc of America Securities LLC, examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of eighteen sector firms examine the outlook for their firm and the sector.