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Consolidation is continuing in the computer service and software industries and is expected to endure. Revenues and earnings have been good, especially in the 2nd qtr of 1995, for computer software companies, and this will last through 1996. These stocks have outperformed the market since 1994 and will do well into 1996. Several equities have long-term capital gains potential through 1998-2000, and are good investments. Company reports for major software companies are presented.

Consolidation is continuing in the computer software and services industry in 1995, and further acquisitions are expected in the future. Large revenues and earnings are also being posted for 1995, due to expansion in the US and overseas economies. Those seeking capital gains for the next three-to-five years will find stocks of interest, and many are timely, but conservative investors need to be selective.

Providers of computer software and services are likely to see continued financial success because of improving economic conditions in the US and worldwide. The US economy, which grew at a rate of 4% in 1994, should continue to expand, though at a slightly lower rate, through the remainder of the 1990s. In addition, consumers should see a steady increase in discretionary income. Sales of computers and software should benefit in all industry segments.

Computer software and services stocks are expected to perform well through mid- to the end of 1995. The industry will be helped by strategic acquisitions, such as Microsoft's planned purchase of Intuit and Sybase's planned acquisition of Powersoft. Long-term investors can find several attractive options. Conservative investors should be wary of potential fluctuations in computer stock prices within a relatively volatile industry.

The computer software and computer services industry is poised for strong growth through 1994 and through the 1997-1999 period. Demand for software applications will continue to grow, helped in part by price cuts in personal computers. Software companies, furthermore, are expected to consolidate in an attempt to achieve better economies of scale. Computer services companies are also expected to post strong gains, helped in part by the increasing divestment of peripheral businesses. Investments in this industry are probably not appropriate for conservative accounts.

Mergers and consolidations in the computer software and service industries continue. For example, Computer Associates International Inc plans to buy ASK Group Inc, and Novell Inc agreed to acquire WordPerfect Corp and also the spreadsheet line from Borland International Inc. Many companies are doing very well because lower computer prices are spurring demand for software. Many software and computer service company stocks are good buys and can be expected to perform better than the market.

The computer services and software industry will do well in 1994 and throughout the rest of the decade. Demand for word processing, database management systems and electronic spreadsheets is expected to continue to grow. New services in the media and home market are also expected to grow. Many firms that have found their niche in specific service markets, such as payroll processing, will increase their business opportunities.

Adventurous investors willing to risk volatile equity will find an excellent array of computer software industry investment choices, including both short- and long-term stocks. This group is expected to be among the top quarter industries for price performance. Oracle and Computer Assoc are well positioned for long-term growth because they are helping to supply personal computer networks to the growing numbers of operations that are downsizing. In 1993, the industry will probably announce record sales and profits.

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