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Sticking It Out With Cheyenne

Inside Wall Street


An old Western song includes the refrain "I'm leaving Cheyenne." Lots of investors have been doing just that--leaving Cheyenne Software (CYE). The stock has dipped 17% so far this year. But Lawrence Auriana, a top picker of small-cap stocks and co-manager of the Kaufmann mutual fund, isn't about to pull out. He sees Cheyenne, headquartered in Roslyn Heights, N.Y., poised for better things.

Cheyenne makes software, mainly data-backup and virus-protection products, for local area networks (LANs)--one of the fastest-growing segments of the computer business. But lately, excessive inventories have depressed its profits and stock prices. Earnings in the second quarter of 1996, ended last Dec. 31, were below expectations. But Auriana believes Cheyenne has been excessively pummeled by the market.

Recently, Cheyenne concluded a pact with Symantec, which makes Norton utility software. Symantec agreed to bundle Cheyenne's ARCserve software into Norton's LAN product lines--further strengthening Cheyenne's marketing. Cheyenne has also developed products to combat viruses that attack Microsoft Word documents. And its ARCsolo 95 is a storage product designed for use with Windows 95.

Despite a strong stance and an expected surge in profits next year, Cheyenne's Amex-traded shares are just 21 times estimated 1996 earnings--one of the lowest price-earnings ratios in the business. Within a year, Auriana expects the stock to reach 30 or so, up from its current 22.BY GARY WEISSReturn to top

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