The outlook is very good for this stock
for the second half of 1996 and 1997:
1) Microsoft is getting ready to release an updated version of its Windows
NT networking software. This will have more connections between the
operating system and Internet software and can be used with a larger
number of computers. Many businesses will be setting up networks when
this software becomes available.
2) "People are having a lot more corporate data on their networks.
Intranets in the next couple of years will be the biggest opportunity
for us" - Bill Gates, in an interview in March with Bloomberg Business
News.
3) Transnet is in a position to take advantage of the trend towards
outsourcing. "As companies look to cut costs and become globally
competitive, they are outsourcing more of their business to smaller
companies that can perform important functions cheaply and efficiently." -
Mutual Fund manager Elizabeth Bramwell, quoted in the year-end edition
of the Wall Street Journal.
4) From Transnet's May 1 release of quarterly results: Service and
support revenues increased by over 25% during the quarter, and we have
taken initiative to further expand our service and support offerings.
Based upon anticipated increases in service and support contracts in
the second half of calendar 1996 and into 1997, we intend to significantly
increase our service and support staff of technicians, systems engineers
and Microsoft and Novell Certified personnel. The wide acceptance of
Microsoft Windows 95 and Windows NT by large corporate and educational
institutions has created significant oursourcing opportunities for which
we are competing. The results from these opportunities awarded to
Transnet are anticipated to be realized in the second half of this
calendar year. We are also evaluating the software tools that can
best handle our clients' needs concerning the "Year 2000" correction
and are taking great initiatives to pursue related opportunities.
In addition to these developments, we are negotiating a long term lease
on certain property owned by Transnet. Based on the current terms of the
proposed lease, we believe that, upon completion, income from this
lease will initially increase earnings by approximately $225,000, or
0.04 cents per share per year.
5) Transnet offers one stop shopping - customers can purchase everything
they need for a network - hardware, software, and support services.
6) The company is getting more and more of its profits from services.
This means that its revenues will be stable over time.
7) There is a barrier to entry in this business - you need a staff of
highly trained people. These are going to be in short supply as the
amount of networking increases.
There was a good write-up on the company in last November's issue of
"Individual Investor" magazine that you might also want to look at. |
