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Under-the-Radar Tech Stock for Today

Sybase is benefiting from the proliferation of smart phones and increased securities trading.

"Under-the-Radar Stocks" is a daily feature that uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.

Is it 1999 or 2009?

Technology stocks have demonstrated a 1990s performance as the Nasdaq has surged 42% from its March 9 low.


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Research in Motion




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enjoy daily press coverage and, consequently, their stocks are more receptive to positive news.

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Many medium-sized technology companies, however, are comparatively cheaper. Dublin, California-based


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is less well-known despite impressive earnings potential.

Sybase is a mobile-phone software maker. Although the company made a name for itself in data management, it has a diverse and expanding lineup. The company recently debuted Sybase Rap, a program that helps capital-markets firms make quicker and better-informed trading decisions. The product is appealing in our volatile market environment. It's likely to be a big winner among Wall Street traders.

Sybase's first-quarter revenue increased 3% to $267.5 million, and earnings per share jumped 38% to $0.33. By comparison,


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suffered a decline in quarterly revenue, EPS and its operating margin narrowed.


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improved its revenue, but EPS was flat.

Although Sybase doesn't offer dividends and has already posted a 33% year-to-date run, it remains attractive. With a price-to-earnings ratio of about 20, the stock remains 33% cheaper than its average peer in the systems software industry. The shares are also inexpensive on the basis of sales, book value and cash flow.

Sybase's financial position is superlative, even among cash-laden techs. A $694 million cash balance and modest $442 million debt load are notable strengths. The firm's Mobile Enterprise business will continue to prosper with the proliferation of smart phones. But a notable area of growth is the capital-markets franchise. A recent report by The Standish Group indicates that Sybase offers a superior database package with measurable cost savings and less down time than competitors.

The report suggests that the Sybase ASE 15 had 22% less downtime than the Oracle 11g and, consequently, produced average annual cost savings of $55,000. Sybase's software powers more than 1,700, or 90%, of the world's largest financial-services firms. As business leaders and Washington politicians have stressed the importance of increased risk management, Sybase has improved its analytics. The largest and most profitable financial firms, including

JPMorgan Chase

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Goldman Sachs

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, generated the lion's share of first-quarter revenue from fixed-income trading. As volume improves and value-at-risk increases on Wall Street, Sybase will be there to soak up the cash from its new software offerings.

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