"The infrastructure industry often sees lower sales in the early months of the year."
Best time to get in might be Q1 2001 if it IPO's in Q1 that is. -def
(below is excerpt from SI article)
Just about everybody is looking for stable energy supplies in California these days. San Jose-based Cupertino Electric, which filed to go public Dec. 22, thinks it can help.
The company, though, is no energy supplier. Instead, it builds power and other infrastructures so clients can have energy supplies without surges and cutoffs. And that's what an increasing number of high-tech, biotech, educational and other institutions -- which are bursting with computers, telecommunications equipment and other gear -- seem to desperately need.
When it comes to power, computers are demanding. They now account for about 13 percent of U.S. electrical use. But by the year 2020, the demand for energy from Internet-related technology, e-commerce and the like could represent 30 percent to 50 percent of total U.S. electricity demand.
Today's technology is also finicky. Businesses that run data centers or elaborate research facilities, for instance, can't afford to have glitches in power supplies mess up their operations. Such disruptions cost them and others $34 billion a year, according to the Electric Power Research Institute. That's why they need reliable equipment and energy supplies.
Enter Cupertino.
Corporations calling
The company -- which has more than 2,700 employees working out of its San Jose, San Francisco and Phoenix offices -- designs, installs and maintains power systems that work with electricity and natural gas. Natural gas is seen as an attractive alternative to electricity, since its supplies are not being squeezed as tightly in today's market.
Cupertino's sales topped $480 million in the first nine months of 2000, a jump of about 110 percent from the year before. Excluding sales of equipment, service revenue was $402 million. That's a 75 percent improvement over the same period in 1999. In 1999, total revenue was $325 million. It topped just $150 million in 1997.
The company had a loss of around $8.5 million in the first nine months of 1999, due to one-time stock-related charges of about $18 million. But if you ignore these charges, earnings would have come in at better than 50 cents a share for the period on net income of $14.4 million.
Again, absent the charges, gross margins were a hefty 18.8 percent in the first nine months of 2000. That's down a tad from 20 percent in 1999.
Cupertino's operating margin represents about 7 percent of total sales and 8 percent of revenue from services.
Rival Integrated Electrical Services (IEE), for instance, had sales of $1.7 billion in the fiscal year ended Sept. 30. It reported gross margins of about 18 percent. In fiscal 1999, gross margins were roughly 21 percent.
Integrated's operating margin is about 2.5 percent, including non-cash compensation charges. Excluding this item, the Houston-based company's operating margin would have been about 6 percent.
Bright future
But if Integrated's results are any indication of how things may go for Cupertino, things should continue to improve. Integrated's earnings fell to 52 cents a share in fiscal 2000 from $1.39 a share in fiscal 1999. This fiscal year, though, they're expected to grow 80 percent -- to about 92 cents a share. That puts its earnings growth in the same ballpark as sales increases, which were 70 percent in fiscal 2000.
Still, the market says Integrated's stock is worth less than $10 a pop. It closed Thursday at $5.88, with a 52-week range of $4.25 to $10.50.
And don't expect great news when it comes to the early 2001 results of companies like Cupertino and Integrated. The infrastructure industry often sees lower sales in the early months of the year. |
