Here's what I got on it from Yahoo message board. Looks great:
August 16, 1999
Life After Y2K
By Rhonda Brammer
Sometimes the price of success is really stiff! Consider a high-tech outfit that a little
over a year ago was all the rage: Computer Horizons. In April '98, investors
deemed it worth a cool $1.6 billion. Today, it sports a value of less than $400 million.
Not even one times sales. This New Jersey-based firm, along with a host of others,
was helping Corporate America get ready for the
Year 2000 and cope with the notorious Y2K bug.
Alas, it -- and others like it -- did the job all too well. The bulk of computer systems
of Fortune 500 firms appear to be amply prepared for the new millennium. For
them, no mistaking the year 2000 for 1900.
The bad news, though, is that the high-margin Y2K sales for the
companies fixing the bug have fallen precipitously. For example,
second-quarter revenues from Computer Horizons' Year 2000 work
plunged a whopping 60%.
Not the least of his investment virtues is a knack for spotting fallen angels -- issues
that are down 60%, 70%, even 80%, selling in the single digits, though they boast
good balance sheets and plausible prospects.
By way of example, last September, after a chat with Bob, we wrote up Brooks
Automation at 9 1/2 -- a stock that this year hit 31 and now trades at 25 1/4 . (His
entire position was gone at 22.)
"No," sighs Bob, when asked. "I don't have another Brooks." There just aren't, he
explains, the sort of bargains in this market that he was able to come up with in the
past.
However, Computer Horizons, in his view, over the next six to 12 months could
come close to doubling.
A kicker: There has been talk that a piece of one of Computer Horizons'
fast-growing subsidiaries, RPM Consulting, might be offered to the public. With
sales of about $30 million, RPM is a very small, but valuable, part of a company that
last year boasted revenues of over $500 million.
Providing high-end network-integration solutions, RPM competes with companies
like International Network Services, which, as it happens, just last week got a $3.7
billion buyout offer from Lucent Technologies.
Now International Network, whose annualized sales are approaching $400 million, is
far larger and may well deserve a premium to RPM.
However, if the same multiple that INS fetched -- about nine times sales -- were
applied to RPM, the small subsidiary would be valued at $270 million, or nearly $9
per share of Computer Horizons. |
