Technology Roundtable

This is a partial transcript from Your World with Neil Cavuto, June 12, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Every once in a while, we have the opportunity to get some of the top names in any given industry right here at this table all at once.

Today, we've got four of them from the technology sector. They're here to give us their read on the war on terror, the economy, the markets, you name it. I'm very happy to have all of them with us. Joining us: John Thompson, CEO of Symantec; Naveen Jain, the CEO of InfoSpace; George Samenuk, the CEO of Network Associates; and Dale Fuller here as well, the CEO of Borland Software.

Welcome to all of you. Dale, I ended with you, let me begin with you, you are all meeting for this technology pow-wow, and a lot of down and droopy faces, is it that bad?

DALE FULLER, PRES. & CEO, BORLAND SOFTWARE (BORL): We have gone through already pretty much the IT overrun. Over the last five years we've seen so much spending, and increase in spending, reckless abandon is probably the right word for it, that we are seeing a real flattening in the market there. And it's going to be going on for quite a while, I think that at least for the next three or four quarters.

CAVUTO: John, do you see the same thing?

JOHN THOMPSON, CHMN. & CEO, SYMANTEC (SYMC): Well, there certainly was wild exuberance as it was referred to at one point in time. And I think the expectations got so high that now anything that's off of that high feels incredibly low. Reality is starting to set in, not just for those of us who are public and in this market, but many of the private companies as well. And so I think that we are in for battening down the hatches for probably another six to 12 months before we'll see an upturn.

CAVUTO: Six to 12 months, that's a long haul for people who used to love this sector, and stayed with it through thick and thin. They're not staying with it now, are you worried?

GEORGE SAMENUK, CHMN. & CEO, NETWORK ASSOCIATES (NET): Well, certainly, there is a lost of frustration amongst customers who have a lot of technology. On the other hand, there are certain segments of this marketspace, like the security segment, which we participate in at Network Associates, that really have taken hold with the customers. The customers' No. 1 concern is to keep their networks available and secure. And that's what we provide.

CAVUTO: Well, actually you benefited in the post-September 11 environment, right? people concerned about viruses, security in general, their computers not getting tampered with.

SAMENUK: Well, the Nimda virus, September 18, was a watershed event which really helped our business.

CAVUTO: But what does that say about the state of technology industry right now, where it needs a crisis to get goosed?

NAVEEN JAIN, CHMN. & CEO, INFOSPACE (INSP): We are actually seeing a good business growth in our merchant segment, which essentially will be providing the service to local merchants. And we're seeing the people are coming back to the malls, people are coming back to the smaller merchants. And we're seeing a good growth, in fact, quarter...

CAVUTO: They're not coming back to your stock, Naveen?

JAIN: That is definitely, true. But that in some offers an opportunity for smart people who are looking for a great investment because our results speak for themselves. We are seeing a growth in our revenue. We are seeing the growth in terms of the bottom line and the telecom sector...

CAVUTO: But it seems like the market is saying — not to you personally, but to a lot of these stocks, and maybe in your case — the hell with you?

JAIN: Actually, you know, in some sense the market tends to be very irrational at both ends.

CAVUTO: It can't get much worse than here is what you're telling me.

JAIN: We were at 45 billion at our peak. I could justify maybe overvalued, but at...

CAVUTO: You can kiss your trillion dollar valuation away for the time being. But Dale, from Borland, when you look at the environment, and investors who have now said, no more technology, I have been burned, I don't like it, I don't want, how do you win them back?

FULLER: Well, for us, we've actually benefited from the downturn. I think that the youthful exuberance, as was stated before, companies today, are looking for ways they can optimize efficiency. They are downsizing or right-sizing. They are looking for the ways that can leverage the technology they already have integrated into the future. And that's what Borland's all about, that's what we've done. So we've reaped the benefits.

CAVUTO: It is interesting, guy, all of your business models are sound, and the approach is sound, and in many of your cases the revenues are sound and the growth is sound, but where you need it most is convincing average investors who used to flock to you, to come flocking again.

THOMPSON: But this is about predictable performance and what has been the underpinning of this downturn has been the lack of predictability for the many companies in the tech sector. And as companies have not performed, they have not delivered, then investors have said, gee, I am not sure I should have my money parked there. In our particular case, we have delivered. We've had consistent quarterly revenue growth and earnings growth. We had a phenomenal quarter in the most recent quarter, and we have been rewarded with the stock price relative to the sector, it has held up pretty well. But we've taken a haircut.

CAVUTO: But, I understand that, sir. Here is what I don't quite grasp, I guess what investors always tell me when they e-mail me and call me, give us that proverbial light, when do you see the improvement, when do you start seeing the pick-up? You are saying it could be as much as a one-year phenomenon, that could kiss off a lot of people?

SAMENUK: However, I think investors have to pick two winners in each space. I don't think there is five or 10 winners like there has been the past couple of years. If you picked the anti-virus space, I think there's two winners. I don't think there's five winners or 10 winners. So pick the best two players in each of the technology sectors...

CAVUTO: Or merge them?

SAMENUK: Or potentially merge them.

CAVUTO: Is that the next thing we're going to start seeing with all you guys?

JAIN: I think that is one of the biggest things, at least we're finding good companies that have good technology. And we are sitting on $300 million cash. We are able to pick up...

CAVUTO: You have $300 million? Or your company has $300 million?

JAIN: The company has $300 million cash. And with our customer base we are able to pick this technology up, monazite it instantly, and actually are able to merge all of these company and able to, when the market picks up and people are really listening to your story, to thoroughly wake-up and say, my God, we really have created a giant here.

CAVUTO: But I wonder now when you have this...

THOMPSON: But I think he is making the right point, companies that have very solid balance sheets, and have an eye towards execution, have seasoned leadership teams sitting at the top, should view this as an opportunity to really take advantage of the downturn in the market...

CAVUTO: And buy other companies?

THOMPSON: ... to rebuild their portfolio.

CAVUTO: And buy other companies?

THOMPSON: That may be a part of it.

CAVUTO: Are you looking at that?

THOMPSON: Absolutely.


THOMPSON: If I told you I would have to kill you.

FULLER: You have to be very careful, too. I think a lot of the companies that are compressed right now, they have a bad business model, the balance sheet's really in bad shape. So a company that could be doing well, like Symantec, like Borland, like Network Associates, they could actually flip their whole boat over, because of the models that they might be acquiring. So you've got to be very careful.

CAVUTO: Will we get the dot-com rage we had?

THOMPSON: Never ever again.

JAIN: I wouldn't call it dot-com rage, but I think eventually what you're going to see is that good businesses are going to become more valuable than ever and I think the winners are going to be decided and it's going to be winner takes all.

CAVUTO: All right. Naveen Jain, thank you very much. Dale Fuller, good seeing you. George Samenuk. good seeing you as well. And John Thompson, thank you very much.

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