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Quest Software: On the Right Side of Barron's

Last week, Barron's Alan Abelson had a list of stocks to sell short for the New Year. On the list was Quest Software (QSFT) .

Actually, this should be good news for Quest Software. Barron's has missed the boat many times with Net stocks and I think this is the case with Quest Software.

Interestingly enough, the company started as a sleepy computer consultant. But several years ago, Quest Software hired Vinny Smith, who was formerly with Oracle. In short order, he has transformed Quest Software into a leader in advanced e-business software solutions.

With a high valuation, Quest Software has made a variety of acquisitions. There was the purchase of Foglight Software for $85 million. The key technology is called Real-Time Application Performance Systems (RAPS). It's definitely complex, but critical for companies. In essence, the technology monitors corporate computing applications to make sure performance is optimum. Customers include Cisco, Lucent, Sun, eBay and Wells Fargo.

Another savvy acquisition was for MBR Technologies. The company develops software for change management and version control. Basically, the technology helps manage big application upgrades (such as for databases) -- but allow for a seamless transition.

The company has also been creating technoligies internally. Recently, Quest Software released I/Watch for Oracle Applications. The software provides 24x7 unattended monitoring of mission critical components with Oracle databases.

It does such things as generate trend analysis and diagnostics. In fact, the technology helps administrators anticipate potential problems and resolve them quickly.

But Quest Software is not a vapor company, hoping to make money. It is currently profitable. In the third quarter, the company increased revenues by 110 percent from last year to $18.3 million. Net income was $708,000, compared to $627,000 in the same period last year.

As the Web penetrates corporate American, there is a huge demand for the types of technologies that Quest Software offers. Powered by this and also bolstered by a strong management team and product line, the momentum should continue for some time.



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