Tom,
Alydaar, like hundreds of other re-engineering shops across the country, see Y2K as a once-in-a-lifetime opportunity for making a killing on rewriting/fixing software that, except for problems handling dates, would not otherwise be touched with a ten foot pole. However, unlike other firms their size, Alydaar decided to swing for the fences and seek venture capital to start hiring people in the hopes of gaining credibility and attracting big clients. This was a race against time to fix a race against time, so to speak.
Do you think billion dollar companies like SAIC or Dupont want to hire a few guys working out of their garages? Regardless of a Y2K company's digs, on what basis do you hire them when they are offering services that, by definition, are a whole new market?
I can't speak for Alydaar, but if it were me, I'd ask by backers to do everything in their power to get my company's foot in the door. I'd say "give me a chunk of code and I'll convert it for free just to prove to you we have what it takes to fix your Y2K problem." If you've ever tried to secure large corporate contracts then you know it sometimes takes years to get to the point where you have a signed legal document sitting on your desk. However, when the contract does get signed, the client wants the work done yesterday. You don't twiddle your thumbs waiting; you start hiring and training and continue to prospect.
For most of 1996, the market for Y2K companies was purely speculative since contract announcements were a rarity. At that point the focus was on who supposedly had the best tools for the job. That has changed. The catch phrase for Y2K companies in 1997 is "Show me the money". With $20M here, $50M there, and millions more waiting to be announced, Alydaar has the numbers to show, IMO.
Even better, while all the "other" Y2K companies are scrambling to make alliances with consulting firms (and halving their profits), Alydaar has the warm bodies ready and waiting to go. One stop shopping.
Yes it is true that Alydaar's stock price seems to be stuck under 13. However, few companies I have spoken with ever think their stock is fairly priced, Alydaar not excepted. As long as Alydaar is on the pink sheets and thinly traded we just have to grin and bear it.
Tom, I'll make you a deal. If ALYD does not reach $20 a share by the end of next week, I'll take those $1.50 shares off your hands at triple what you paid for them <gg>.
- Jeff |
