There are key aspects of a successful turnaround story.I would...

There are key aspects of a successful turnaround story.

I would include in these

1. product quality, market growing

2. customer acceptance and enthusiasm

3. management and board accepting need for change

4. cash flow sufficient time to earn out.

5. broadly benign environment

1. is ok, as there have been few issues for a product as complex as software. Health services market still a growing one as the health industry tries to understand how to manage itself.

2. Is good, softened a little by the razor gang in the UK, but offset by the possibility of investment by the UK entities to reduce future costs. Europe still good.

3. Like the steps being taken. Is a judgement thing, from the outside. I didn't see the announcement as a lack of transparency. Suspect they have missed a DCR which is understandable.

4 and 5 are ok to neutral. If the operations were in the US, nup, would get a black mark. However, Euro and GBP are staying somewhat in parity to us, so not as much loss of earnings. Cash is being managed (note the $50m saving) and the debt refinancing.

On balance, I see it as a nice recovery story. Potential for some earnings surprises as momentum builds back end of next year.

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