Mike, companies doing business with AT&T/BIS will probably be making lots of announcements like this from here on out. BIS/TCI decided a month or two ago to transition their major markets like SF and Denver away from full turnkey (walkout, design, engineering, installation, construction, test, turnover) to individual fee for service contracts. Integration Technologies, as part of Tetra Tech Inc., had 3 of the turnkey projects that are being converted. So did General Instrument and Argus Communications (IT had SF, Argus had Denver).
Bottom line is that Tetra Tech, General Instrument and Argus get less work, which is then doled out to new companies to do a part of the overall build in these ex-turnkey locations. The old turnkey companies had big, overall contracts for the complete project, but the profit margins were low to get the big revenue. Now, less work for them, but because they are contracted individually it demands higher individual service prices and hence higher margins on the work that they actually do. So less overall revenue for people like Tetra Tech, but higher profit margins on the work that remains.
Hope that wasn't too hard to follow and the above explanation makes sense. Yes, they are spreading the same amount of work around to more players. |
