Report Card: Rick Sherlund

Rick Sherlund Goldman Sachs
	Report Card 2* Overall rank 2* Rank by institutions 7* Rank by stock picking Makes money for me Saves me from disaster Makes me think Tells the truth Meaningful service, not overkill Well-connected *Out of 30. Best star rating is 3 stars. Click here for our methodology.
2nd Place (tie) Application Software

Biography

B.A., M.B.A., Cornell University. Sherlund has covered the computer software industry at Goldman Sachs since 1982. Prior to that, he was a senior accountant at Arthur Andersen & Co. He is a co-founder and former president of the Software and Computer Services Industry Analyst Group.

Industry Outlook and Style

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"Rick Sherlund," wrote a client who voted in TheStreet.com's Analyst Rankings -- Equity 2000, "does a great job managing Goldman's software group. They produce strong recommendations based on fundamentals that drive strong stock performance."

With a reputation like that, it's not surprising that investors pay close attention to the views of Sherlund and squad, which right now are bullish. The group's June 19 report, B2B & Internet Infrastructure Software, was optimistic on the business-to-business software sector. Sherlund, who was not available for an interview, believes that slowing economic growth and easing rate hike concerns are positives "and may support a more accommodative IPO market in the second half of 2000." He also expects that an "extension of the economic cycle without renewed inflation should provide fertile opportunities for technology investors."

Sherlund explained in the report that the shift in computing platforms from client-server architectures to "thin-client" Internet standards "allows for collaboration among trading partners, suppliers, and their customers and is driving accelerated demand for solutions that automate business processes outside the firewall and throughout the extended enterprise." A thin client in a network computer environment does not store anything locally. Software solution providers benefiting from this new computing platform include Internet infrastructure, B2B and electronic customer resource management (demand chain) solution providers.

Sherlund and his team believe that companies will be willing to spend significantly on these solutions because they want to stay competitive and because sales cycles are shortening as market acceptance builds. In addition, "the return on investment for Internet infrastructure, B2B, and e-CRM solutions is rapid and quantifiable, accelerating adoption rates of such technologies and providing strategic value."

Sherlund's group also foresees some near-term consolidation among niche solutions providers to expand their product lines. But they are concerned about stock prices. Despite the big drop in share prices, "valuations are still rich by traditional metrics," said the team in its report, and "are still at the high end of historical levels."

Stock Pick

Favorite stock for next 12 months:
Amdocs Ltd.(DOX)

Comment:
"Amdocs differentiates itself from competitors by providing a full range of products and related services to its core high- and middle-tier customers, including telecommunications service providers and emerging leaders that require significant software customization and ongoing support. This high-end focus provides Amdocs with the opportunity to sign large contracts with customers for additional products and services. The company's move into the market for billing services for Internet service providers and wireless data services should benefit its growth and stock price." (Bear Stearns has an investment-banking relationship with Amdocs.)



Rate Their Stock Picks:

Which stock do you like best? Phillips*: Ariba Gilbert: E.piphany Sherlund: Amdocs Ltd.
* Gilbert and Sherlund each gave us their top stock pick. Phillips gave us a list of four picks, from which we chose Ariba.

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