Forrester Research Inc (FORR) 2002 Q1 法說會逐字稿

Good day and welcome everyone to this Forrester Research First Quarter 2002 Earnings Result Conference Call. Today's call is being recorded. There will be a rebroadcast available beginning today at 2 P.M. Eastern Time through midnight April 30th. You may access this rebroadcast by dialing 719-457-0820. You will need to use the confirmation code 379336 to access this replay.

With us today is the Chairman of the Board of and Chief Executive Officer, Mr. George Colony and the Chief Financial Officer, Mr. Warren Hadley and Investment Relations Manager, Ms. Kim Maxwell.

At this time for opening remarks and introductions, I would like to turn the call over to Mr. Colony. Please go ahead, sir.

Thanks, very much. Good morning and thank you for joining our 2002 First Quarter Conference Call. With me today are Warren Hadley, CFO and Kim Maxwell, Industrial Relations Manager.

The company is in three sections. I am going to start off with a review of the first quarter, Warren will then detail financial results and I will return to update you on our plans for the second quarter followed by questions.

Before I begin the call, Kim Maxwell will read from the Safe Harbor provisions. Kim.

This call will contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipates, intends, plans, estimates or similar expressions are intended to identify these forward looking statements. These statements are based on the company's current plans and expectations and involve risks and uncertainties that could cause future events and activities of operations to be materially different from those set forth in the forward looking statements.

Some of the important factors that could cause actual future activities and results to differ are discussed in our reports and filings with the Securities & Exchange Commission.

The company undertakes no obligation to update publicly any forward looking statements whether as a result of new information, future events or otherwise.

Thanks, Kim. I would like to summarize our financial results. Revenues for the first quarter was $26.1 million. Pro forma net income was $3.3 million. Pro forma EPS was 14 cents per share. Cash from operations was $1.6 million. And our cash position as of March 31st was $203.2 million.

In reviewing the first quarter I will cover four areas, the general of the quarter, a progress report on WholeView and event update and then finally steps that Forrester took in Q1 to build influence.

Turning first to a general overview of Q1. Technology budgets did remain tight. On the first quarter call I talked about some slight unfreezing that occurred in Q4. My feeling at that time was that budgets would tighten again in Q1 as companies held capital spending until a full recovery was underway. And, in fact, that was the case.

We know that a major backlog of technology projects continues to build. However, these technology initiatives will not gain momentum until the overall economy improves. I will provide more detail in the second half of the call about where Forrester believes the technology sector is headed.

We had important wins during the quarter, especially in the Global 3500 base. Many traditional clients renewed in Q1 including Michelin, UBS, Panasonic, WPP, Hoffman LaRoche, Microsoft, Toyota Honda, Proctor & Gamble, the Wall Street Journal and Target. In addition, we added some important new clients including Nine West, Hurst, Hurdlesman, Cross Mark, The U.S. Air Force and Light Bridge.

As many of you know, in January we announced WholeView research are no barriers approach. Global 3500 companies have changed marketing, business strategies and IT who formerly managed technology separately have begun to coordinate and unify their efforts. Forrest WholeView maps directly to this change, providing unified guidance on customer trends via techno graphics, business strategy via tech strategy research and technology investments via tech rankings.

In very simple terms, WholeView delivers three key benefits. It is comprehensive, it is simple to use and it is very accessible.

WholeView includes major enhancements to our client service. Starting with WholeView delivery from one integrated website, Forrester clients can easily and quickly move to any research they need, the experience is unified, the experience is very open.

Unlimited analyst access is available as an add-on to WholeView Research. UAA clients speak directly with analysts to get their research questions answered, and we sold 322 WholeView seats in Q1.

The newly formed client resource center was DRC.

Since we are presently in the renewal cycle, we will be the last group to migrate. Feedback has been extremely positive and here are a few quotations from clients:

A senior VP of R&D stated, "The offer was irresistible. Forrester addresses our objective of the moment, our long term strategy issues and helps us understand why we are coming up against a brick wall when we talking to a particular customer. We have broad needs and WholeView meets them very well."

A business services executive noted, "Before the change, I found that picking and prioritizing coverage areas were a big challenge. I am very happy to see the change to WholeView, Forrester now has the best approach."

A research director at a major vendor noted, "WholeView Research is a genuine effort to tie it all together in a manner that makes sense. Companies such as ours need complete visions of the future to make strategic decisions, not just pieces. Your website continues to be the best of any other firms, your site is truly the benchmark."

And I will tell that I have personally spoken with over 50 clients in the quarter. There was a lot of happiness in our client base over WholeView.

Continuing with the WholeView update, we rolled out First Look this quarter, a two page summary of our research, which is an email to clients every two weeks. First Look is a way for our clients to quickly and simply get to the relevant research.

We are presently development other e-tools which will enhance our clients experience with WholeView, enabling them to get to the data analysis and strategic advice easily and watch the space.

The change to WholeView has been very well received by clients in Q1. Its impact will be long term. It is not a silver bullet but rather a systemic and positive enhancement in the relationship between Forrester and our clients.

Turning now to evens, we held three successful events in Q1. The Technology Leadership Forum was held in Scottsdale. The forum was an emergence in web services. Press coverage was very extensive and included a very positive article and on the forum in UPSIDE magazine.

The Automotive Summit in Los Angeles was standing room only. 99% of attendees said that they would attend another Forrester event.

Our first ever Retail Summit was sold out and was one of the highest ranked in Forrester history. The contents focused on how retailers could use technology to cut costs, add incremental revenue and strengthen consumer relationships.

We introduced web casting in Q1 using the Virage platform. Webcasts of all forms in summits are available for online delivery.

We continued to build influence even in the slow economy. I was at the World Economic Forum in January, co-chairing a session on risk management with the CEOs of HP, UPS, Lehman Bros. and Marsh McClennon. In addition, Forrester contributed a paper to Harvard's Global Information Technology Report that was distributed at the WEF. Emily Green, our North American managing director was a keynote speaker at MELIA, a think type summit in Kahn. MELIA was attended by over 5,000 technology executives from 47 countries.

Forrester was quoted over 4,000 times in Q1, an increase of 100% year to year publications which featured Forrester

Included the Wall Street Journal, Business Week and Fast Company. In addition, Forester Analysts did video appearances on CNN, CNBC, MSNBC, CBS and PBS.

And I will now hand the call over to Warren, who will give a financial review for first quarter. Warren.

Thanks, George. Over the next few minutes, I will review Forrester's first quarter results, the balance sheet at March 31, our first quarter metric and the outlook for our business for Q2 and 2002. Please note that the income statement numbers I am reporting today are pro forma and exclude the following two items, a Q1 reorganization charge of $9.1 million related to the January work force reduction and a Q1 charge of $2.2 million for write downs from impairments of our non marketable investments. I will address both of these later in the call.

As George ha reported, Forrester's first quarter results are within the guidance range that we provided on January 30, 2002. First quarter revenue decreased 40% to $26.1 million from $43.6 million in the first quarter last year. Net income decreased to 33% to $3.3 million from $4.9 million last year. Earnings per share of 14 cents on diluted weighted average shares outstanding of $23.9 million compared with 20 cents and $24.7 million shares last year. The first quarter core research revenue decreased 45% to $19.3 million from $35.4 million last year and comprised 74% of total revenue for the quarter. First quarter advisory services and other revenue decreased 18% to $6.8 million from $8.3 million last year, and comprised 26% of total revenue for the quarter.

As George stated, we held two summits and on forum in Q1. In Q2 we plan to host two forums and two summit events. We expect advisory and other revenue to be in a range of 25 to 30% of 2002 total revenue and core research to comprise 70 to 75% of our 2002 total revenue. On a geographic basis, 28% of Forrester's first quarter revenue was derived from international sales compared with 30% in Q1 last year. This is in line with our expectation that international revenue will comprise 26% to 30% of Forrester's total 2002 revenue. Operating expenses for the quarter were $22.9 million down from $37.7 million last year. In Q1 we estimated that the January workforce reduction would result in annualized savings of $18 to $20 million.

Combined with our July 2001 reorg, our total annualized savings from these workforce reductions are expected to be approximately $33 to $37 million.

Our actual Q1 savings were in line with these estimates and consisted primarily of compensation benefits, travel, rent and depreciation. Operating income was $3.1 million or 12% of revenue compared with $5.9 million or 13.5% of revenue last year and in line with our target guidance of 10 to 12%.

We incurred a reorganization charge this quarter of $9.1 million for costs related to the January workforce reduction. This charge was above our initial estimate of $4 to $6 million primarily due to write-offs related to excess leased space and additional fixed asset breakdown.

Of the $9.1 million, approximately 50% relates to compensation benefits and professional fees, 30% to fixed asset disposals and 20% to leased space write-offs. As I mentioned earlier two of non marketable investments became impaired during the quarter, resulting in write downs totaling $2.2 million. We wrote down our investment in E-Value Media Resources by $1.4 million as a result of an independent valuation event in the first quarter.

In addition, we wrote down one of our private equity investment funds by $784,000 as a result of impairments to companies within their investment portfolio.

In Q1, we also completed our FAS 142 Review of Goodwill and are pleased to report that we have incurred now write downs related to our acquisition of Forrest. We booked a pro forma effective tax rate of 30% in the first quarter and expect to continue using this rate on a pro forma basis for the remainder of the year.

Now, I would like to review the balance sheet. We continue to maintain a strong cash position. Our cash and investments at the end of the first quarter were $203.2 million. We generated cash flows from operation of $1.6 million in Q1. During the first quarter we used $3.5 million of cash to purchase 185,000 shares on the open market pursuant to our stock buyback program. We plan to continue to purchases shares in the second quarter. Our accounts receivable at March 31 was $15.1 million, down from $24.5 million at the end of 2001. We had another strong quarter for collection with cash receipts totaling $28.7 million. Our sales outstanding at March 31 was seventy-nine days, a decrease from eighty-six days last March 31st. An AR over 90 was 6% down from 12% a year ago. Net profit in equipment decreased to $16.4 million from $21.3 million at the end of 2001. This reduction was mostly due to fixed assets written off in conjunction with our January workforce reduction. Our capital spending in the first quarter was approximately $200,000. Deferred revenue on March 31st was $53.4 million compared with $93.3 million at the end of March, 2001, representing a year over year decrease of 43%.

And now I would like to review Forrester's first quarter metrics. Agreement value is the total value of all contracts of core research and advisory services in place at a given time, without regard to much revenue has already been recognized. Agreement value is $90.1 million at March 31, a 47% decrease over last year.

Forrester's average contract size for core research in the first quarter was $44,400. It decreased to 15% from $52,500 last year.

The average Level One Partners Program contract was $163,600, a decrease of 6% from $173,700 last year and the average level 2 Partners Program contract was $79,400, an increase of 4% from $76,600 last year.

Forrester's retention rate for client companies at March 31st was 50% and below our target range of 74 to 76%. Our dollar retention rate was 63%, also below our target range.

At the end of the first quarter, our total client companies was 1,309, a year over year end sequential decrease.

Our head count at the end of the first quarter, Forrester had a total staff of 442, down fro 581 at the end of last year. Current head count includes their research staff of 144, down from 191 at the end of 2001, and sales staff of 136, down from 184 at the end of 2001.

One additional item to report in Q1 is that we switched audit firms. Our local Anderson team provided us with excellent service and advice during the past seven years, but given the uncertainty surrounding the current events, we felt it was prudent to make a change at this time.

After meeting with and reviewing audit firms during the first quarter, we have selected Deloit & Touche and our engagement with them is off to a great start.

The last topic I would like to cover today is our business outlook for Q2 and the full year of 2002. Our guidance continues to be based on a continued lack of good economic visibility an does not include the impact of the charges from the workforce reduction and impairment.

This guidance also assumes no significant improvement in the economy in 2002. In this difficult environment, Forrester remains very committed to driving operating profits, earnings and cash flow. For the second quarter of 2002, we are aiming to achieve total revenues of approximately 24 to 26 million, an operating margin of 10 to 12% and pro forma diluted earnings per share of approximately 12 to 14 cents. For the full year of 2002, we are reaffirming our previous guidance of revenues of approximately $100 to $105 million, a pro forma operating margin of 10 to 12% and pro forma diluted earnings per share of 50 to 55 cents. George and I will be presenting at the Bear Sterns conference in New York on June 12. We will be on the road quite a bit in the second quarter and hope to visit with many of you. Thanks and now I would like to turn the floor back over to George.

Thanks, Warren. To complete the call I want to address three topics, additions to WholeView Research, Forrester's Q2 research coverage and finally an events update for Q2.

WholeView has changed the way we will manage the introduction of new research coverage. The old world model of services, with barriers between coverage, required expensive start up costs, three analysts, to rigid a system, as an example.

For WholeView were actively managing the topics that are covered, tracking usage on a real time basis and adjusting staffing, research production and research timing to yield the greatest value to our clients.

The flexibility and openness of WholeView means that we can quickly expand in team coverage depending on client needs. We can create topics quickly and virtually match to market shifts.

Again with this flexibility is the special topics section now featured within WholeView, it includes web services, coordinating supply and demand change, and ex-Internet.

As I mentioned on the last call, we were rolling out two tech ranking categories in 2002 which we offered as part of WholeView.

Finally, we will be announcing other strategic services to augment UAA and advisory. I will be talking more about these on the Q2 and Q3 calls.

We are insuring that our research is highly topical and highly relevant to our clients. Web services is emerging as the primary area of focus. This technology will enable companies to more fluidly connect systems internally and externally. I hosted a roundtable of European CIOs two weeks ago in Amsterdam on web services. Well, Europe is ten to twelve months behind U.S. companies in web services. Every company that attend the roundtable believed that the technology would be critical to their operations within the next year.

And, by the way, when I asked the CIOs to vote of who would lead in web services from the vendor side, they split three ways. One- third said Microsoft, one-third said Sun and one-third voted for an open group, perhaps like IBM.

Forrester will be releasing a report in mid May on web services and the working title is, The Truth About Web Services," and I will just give a few conclusions, early conclusions.

Number one, web services is the most important technology shift since the web, but it is clouded in hype and that's making it difficult for users to actually see the benefits.

Number two, developers can build basic web services for less than $5,000, a critical cost threshold. It is the same threshold that made Lotus 1, 2, 3 and the web possible, web services is definitely bottoms up phenomena.

And, finally, number three no vendor provides al the juice today, not if they are P, not Microsoft, not Sun. But we believe they must agree to get along in order to encourage more investments in IT. It is a rising type strategy and it is typical to see change in the software industry as it is forced to mature.

Other important research forthcoming from Forrester include a report that we call, Organic IT. It is a new holistic way to think about technology deployment.

What it really says is that by combining commodity off the shelf technology in creative new ways, organic IT will let Global 3500 firms manage their back office systems much more efficiently.

And organic IT will have true impact on the technology industry. Number one, it will set up a new round of focused invasion and number two, it will enable large companies to squeeze a lot of value from sunk technology investments. And this dynamic, we think will dampen the technology recovery in some sectors, such as the storage and server markets.

We just released a report on package applications design and this report is highly critical of packaged applications and how they are built. Most fail Forrester's usability tests.

We test the GRM and counter management systems and uncovered a host of failures including incorrect use of controls and gives it the language and full responsiveness.

The bottom line here is that there is $6 million in hidden costs for most deployments, including additional training, squandered worker work productivity, pushing the payback period out by two to four years.

And finally, our tech recover report update was issued on March 19. In Q4 of 2001 we said that the technology sector would begin recovering in the second half of 2002. The March report updated our numbers. 2002 will see modest growth of 3.9%, 2003 will see double digit growth of 10.4% and then finally 2004 will be 12.4% growth in the tech sector.

The report reconfirmed a believe that the tech sector will recover slowly with an even impact on sub markets.

Turning to our Q2 events calendar, it includes two forums and two summits. The European leadership forum was held in Amsterdam two weeks about to a sell out crowd. I was actually there in attendance and my overall feeling is that the tech recession will be far less severe in Europe than it ahs been in North America. We will host a site design and telecom summit n May and then finally the finance forum will be held in New York City in June. The speaker roster includes Charles Gifford, President and CEO of Fleet Boston, Ken Lewis, Chairman, President and CEO of Bank America, Kristos Krostakos, Chairman and CEO of E-Trade Financial and then finally Harvey Golub, former chairman and CEO of American express.

So, to conclude, market conditions are giving Forrester the time and space to make critical and positive changes in the way we work with our clients. With WholeView Forrester's differentiation, value and position of the market is reaffirmed.

We are the only research firm that has unified three distinct research methodologies into one offering. We are the only research firm that is helping IT business strategists and marketing work together.

WholeView positions Forrester to give maximum guidance to our clients as they sit and executive the post recession growth strategy. Warren and I will present at the Bear Sterns conference on June 12 in New York City, we look forward to seeing you there. And thank you for listening to the conference call. Warren and I will now take questions.

Thank you. The question and answer session will be conducted electronically today. If you would like to ask a question, please press the star key followed by the digit 1 on your touch tone telephone. We will proceed in the order that you signal us and we will take as many questions as time permits. We ask that you press star 1 at this time to ask a question.

And we will take our first question from Fred McCrea with Thomas Weisel Partners.

Good morning, everybody. Maybe we could first talk a little bit about, in terms of the restructuring, particularly in terms of the fixed assets right now, kind of what the composition of those assets - actually what made them up and kind of, certainly, the total dollar amount of charges and what they expected and kind of walk through where the overages came.

Sure, on the fixed asset side for a write down standpoint, we wrote down some computer equipment, laptops, etc., as well as some software and then we also wrote down some leasehold improvements related to some excess lease space that we essentially gotten rid of written down.

The biggest area of overrun on the charge compared with the answer that we gave of $4 to $6 million, certainly the excess of lease space that back in January we thought we had a good sublet market opportunity to go ahead and sublet that market, sublet that space, rather. But it didn't turn out and as a result there's about $2 million of charge related to that.

What have you decided to do with your California office?

Well we are trying to sublet there but we will keep that office open.

Oh, it is still open.

Oh, absolutely, yes. We will sell out some space there, but that office will stay open.

The field office we closed in the last quarter was Toronto, which was four people.

Then kind of looking at the renewals, it looks as if we have seen 51%, you know, the gap between last quarter and this quarter wasn't as dramatic as we have seen in prior quarters and also being on a four quarter run rate. Do you feel tat things are at least, deceleration decline there, George?

I think that we basically bottomed out there. Warren you are shaking your head?

I think we have bottomed out and we expect that in the next two or three quarters we will start to see the retention rates pick back up a little bit.

And loss of clients again, it is mainly $100 million clients in revenue and I was going through the list this morning, I only see a loss of about, is it 12?

About 20.

20 with over 3,500 clients, so it is a very small number of the total number.

And in terms of the, the number you gave at the very beginning and George, he sold 322 WholeView seats, could you define what a seat actually means with that.

Well, those are actually, Fred, UAA teams.

Oh, I am sorry.

Those are not Whole receipts. Remember, every seat in the Forester portfolio is now a WholeView seat.

Okay.

Except for the ones that w are still migrating via renewal in the real process.

And how do you define seats, is that how many seats in each customer.

Yes.

Okay.

So if you are Proctor & Gamble and you buy thirty seats from us - well, if you buy 30 likenesses, if you will, then there are thirty people who can then use our research at Proctor & Gamble. Those are seats.

And then finally, maybe you could talk a little bit about, you know, if you saw, clearly the conference business performed well and clearly we could see some sectors alignment between the sectors that they cater to and the overall strength of the economy, maybe you could talk a little bit more about where you guys are seeing particular areas of strength on kind of a business front, you know, by industry?

Yes, actually, can I have those numbers, Kim. There are four areas of real strength here, Fred, software vendors, believe it or not, even given the capital spending problems, health care, CPG and energy. Those four.

And we are actually kind of surprised by the automotive forum or summit was totally sold out. We put as may pieces we could in that room and I think we turned away fifteen or twenty people to that forum, to that summit.

High grade problem.

What's that?

High grade problem.

Yes, it is interesting, looking at the Gardner call this morning, they are showing a lot more weakness in events than we are. I think that we are picking the right topics right now.

Clearly that has been a leading indicator of problems for a number of other vendors.

Okay, great, thank you. Open up the forum.

Okay, thanks, Fred.

Our next question comes from Terry Reilly with Kramer Rosenthal.

Hi, good morning, George.

Hi, Terry.

Taking a look at your guidance for the year, the $100 to $105 million in revenues, I mean, that suggests that you expect things to basically stabilize here around $25 million. What gives you confidence there, given the customer metrics? It looks like we have seen some stabilization, but, you know, what are you looking to see that this is bottomed out or see kind of sequentially black quarters throughout?

Well, I think that as we analyze the customer base, as an example, Terry, we have approximately 500 global 3500 companies and there we do it much higher rates than the general rate. That is becoming a much larger proportion of our total days.

So that gives us, we think, some ground to stand on. If you look at the AV in the next three quarters, we have a lot of AV out there from last year, so that gives us confidence.

And I think there is a general belief, as I said, talking about the report that we put out, we believe the tech recession will begin to turn here in Q3 - Q4, and it is not a bounce at all, it is a slow gradual recovery there, and we think that's going to help us.

There are going to be a lot of factors and maybe we can reap you to the first factor I talked about, is the client base generally, as we decline in numbers is increasing in quality.

So you scrubbed your customer base and when you look at it, even though you lost about, you know, 200 customers this quarter, the quality of the 1,300 you got a long standing as far as the customers.

Exactly, and the new business that we are getting now, feels much more solid to us than it did a year ago, of course. People are spending money now, they've got bucks and they've got a good business plan.

And looking at our pipeline to new business, they are actually, they are up ticking right now too.

Your net loss to 233 in the quarter, how many did you add in the quarter?

About 325 added in the quarter.

325, okay. 325?

I'm sorry 92 were added in the quarter, 325 loss for a net number of 233. I wish it was 325.

That would be a positive sign.

We will get there again.

On the cost side, I was real impressed with the SGNA. To what extent, you mentioned that the guidance doesn't include the SNGA reductions taken. Can you quantify that and why would that be in guidance? I would have thought it all happened January.

The point is that the charges from the Q1, the reorganization costs for the entire year is not included in the 2002 guidance.

Okay, so the one time.

That's right.

The operating savings that were generated from the work force reductions of both July and January are included in our guidance going forward.

How much of the savings have we seen and I guess GNA, you took it down to about $11.8 million versus $17.5 in Q4. How much is already behind us, is there any more that will be coming out in Q2?

In the first quarter we saw probably about 85% of our total quarterly savings, so there will be a little bit more in Q2 and then quarterly throughout the rest of the year.

You also mentioned that you expect the share count to be 24 to 26 and you bought back 180,000 this quarter, it wasn't that aggressive, but why would we expect actual dilution in a creep in the share count versus, you know, an aggressive buyback plan and seeing the share count down?

Yes, the share count at the end of Q1 was $23.9 million, so if we have any options that are exercised or employees stock purchase plan to come around from quarter to quarter, which do happen, that will increase our stock price.

Also, the average stock price have an impact on our treasury stock calculation that could increase it in the future as well.

And then, you know, just to follow up on the buyback question. You only did, what, around $180,000 in the quarter, you know, net, net cash. Why not be more aggressive?

Well, we felt we were somewhat aggressive in the first quarter and we continue to plan to buy stock in the second quarter. Of course it is going to be subject to stock availability to prevailing marketing conditions, to our financial conditions, etc. So we plan to be in the market in the second quarter.

Okay, thanks, I will let someone else take it.

Thanks, Terry.

Our next question comes from Sandra Notardonato with Adams, Harkness & Hill.

Good morning.

Hi, Sand.

How are you?

She got your name right?

Yes, she did, we practiced before the call. You know, George this morning Michael Fleischer on the Gardner call talked about the long term growth rate for the industry at 15 to 20%. I was wondering if you would, you know, would share your comments on that and how you see Forrester, once we start to see tech spending increase, what you think the longer term growth opportunity is?

Well, I think that if you - remember, as tie goes by, he is rather do business with us, because 30% of his revenues are coming fro consulting, which I think in the long term will have lower growth rates.

And also Forrester tends to be pointed more toward the external opportunity for large companies, how they use technology to win markets and win customers, whereas Gardner is centered mainly around in the artist base, the internal of a business.

And if you look at historically, we grew at a much faster rate that Gardner over the last five years too. I just talk about our potential growth rate. I still think we can grow in the 30 to 40% range. The industry in total, on our side of the industry, probably is the 20 to 50% range. In the IT world he is probably in about the right range.

I think that we have a potential for faster growth rate than the IT centered research firms like Gardner.

Okay, can we assume then that if you are growing at that 30 to 40% range that you would return back to the model, the financial model that we saw in the 1998 through 2000 range or is that too aggressive.

It is kind of weird to be even talking about this right now, but I don't think that is too aggressive. Certainly we were in a technology, I mean, it was a bubble, right, in the 1999 - 2000 time frame. But even before the bubble, Forrester grew in the, well, here we grew between the 40 to 60% range, even before the bubble materialized.

So, we are staying with our business model and when the technology market turns, I think there is a very good opportunity here.

Okay, any competitive bidding situations this quarter that you saw, you lost market share to a company like Gardner, anything you can comment there on the competitive landscapes?

Yes, we use Siebel extensively her now and we have a win lots and there is competitive now for people. G-2 was a very small factor for us. We were losing one and five, maybe one and six deals to G-2. So g-2 was not a big factor for us. And I think if you look to the Gardner call, G-2 is just not getting much traction right now.

Jupiter, of course, is evaporating. AMR has popped up as a little bit more of an aggressive player. But that's mainly on the discreet and process manufacturing side. Not generally.

And what about Giga, do you think you will get all?

No, no. I don't see them.

Okay, just a couple of more questions around the new license based model. How are you seeing pricing on a per seat basis if you transition clients to this new model and that you are signing new clients on?

What I would say, Sandy, is I don't have a good feel. Do you have a good feel Warren?

Yeah, it is too early to tell you.

You know what we are going to do, Sandy, is we are developing the metrics for the Q2 column and they are going to encompass issues like this and questions like this. So, we will give you a more complete picture in the Q2 call.

Just lastly, what are you conversations now with Joel in terms of how you are focusing your sales forces efforts on growing on a per seat basis as opposed to selling new research products?

Yes, I mean, it is a very good question because we used to sell on a two access matrix, now we are on a on access. And it is a C change, and it is a head change for our sales force, instead of selling a number of service directors by number of seats and getting greater penetration. Basically we are orienting the sales force training the sales forces and Gilbar is helping to do this to find more buyers and more companies, more buyers in the companies that they sell to now.

So, it is a strategy for getting a greater understanding of the client, a greater understanding of how they are using technology, using the technology and how they are organized.

So, I think it is actually, it is a great strategy for having a more complete linkage with the client as we go forward. But, again, it is early for us, Sandy.

Sure.

We have one quarter under our belt here.

That's fair, that's fair. Warren, can you just give me the off balance sheet deferred revenue number?

Sure it was $9.9 million at 3/31.

9.9 million, okay, great, thank you, very much.

Just as a reminder, if you would like to ask a question, please press star one or if you have a follow up question please press star one at this time. And we will pause for just a moment. And we will take a question from Mike Hlatki from Bear Sterns.

Hi, thank you, very much. Just one question, I don't know if you answered this already, the $9.1 million in, I guess, one time costs related to the restructuring. How much has that been paid during the quarter in cash?

Well, about 30% of it is not in cash, 70% of it is cash.

Okay.

Then about 20% of the cash piece will be paid out over the next several quarters, it is an accrual item.

Okay. And where was Cap X during the quarter?

200,000. Very low.

Very low, got you. Thank you very much.

And as it appears that there are no further questions at this time, Mr. Colony, I will turn things back over to you.

Okay, thanks for joining the call guys and we hope to see you over the next quarter, we will be out on the road. Thank you, very much.

And that concludes today's conference. Thank you for your participation.