More on Disaster Recovery Services
From Bloomberg:
quote.bloomberg.com
Disaster-Recovery Service Sales Expected to Rise (Update7)
By Andy Peters
Atlanta, Sept. 14 (Bloomberg) -- Computer disaster-recovery service providers, including International Business Machines Corp., SunGard Data Systems Inc. and Comdisco Inc. may get more sales because of the World Trade Center's destruction by terrorists.
Companies, law firms and government agencies are seeking help to find or replace documents and computer files after the worst terrorist attack in U.S. history devastated the world's financial center, said Jim Simmons, chief executive of SunGard's business continuity and Internet services unit.
Transaction tickets at bond trader Cantor Fitzgerald LP were destroyed, and the U.S. Securities and Exchange Commission lost files on about 300 active investigations. The recovery of such data will be among the biggest efforts ever, though the billions spent on computer systems to prepare for the Year 2000 bug's havoc may make it easier to restore records now. Simmons and other executives couldn't estimate the cost of recouping data after Tuesday's attack.
``The way things are built today, for most companies there is so much redundancy of data that it probably won't be the biggest unrecoverable loss ever,'' said Dennis Law, a vice president at Electronic Data Systems Corp., the second-largest U.S. computer services provider after IBM. ``It may be the largest interruption of access to data ever.''
Demand Seen
``The tragic events will create demand for these companies' services,'' said Franco Turrinelli, an analyst at William Blair & Co., who has a ``long-term buy'' rating on SunGard shares. He doesn't own shares of SunGard, IBM or Comdisco, the three largest computer disaster-recovery providers.
New problems bring new clients to such businesses, said Donna Scott, an analyst at Gartner Inc. in Austin Texas.
``Every major disaster increases awareness,'' she said. Yet, two out of five companies usually go out of business because of disasters, she said.
Comdisco shares rose 34 percent in the 12 months after terrorists bombed the World Trade Center on Feb. 26, 1993. Its sales for the fiscal year ended Sept. 30, 1993, fell 2 percent to $2.15 billion from $2.21 billion a year earlier.
SunGard's shares rose 15 percent in the 12 months following the 1993 bombing. Its sales rose 17.5 percent to $381.37 million in the fiscal year ended December 1993.
In the past year, shares of SunGard have risen 33 percent, IBM has fallen 24 percent, and Comdisco has dropped 97 percent. Investors haven't paid much attention to disaster recovery, said Cenk Turkinan, an analyst at Ice Securities Ltd. in London.
SunGard gets 20 percent of its sales from disaster-recovery services, said Andrew Jeffrey, an analyst at Robertson Stephens Inc. The rest comes from software that automates the completion of stock and bond trades, and related services, he said.
U.S. companies will process fewer trades this quarter because of the disruption from the terrorist attacks, Jeffrey said.
``I'm not sure I'd rush out to buy SunGard on accelerated sales of disaster-recovery services,'' said Jeffrey, who has a ``market perform'' rating on the shares.
U.K. Companies
U.K.-based computer disaster-recovery providers Guardian IT Plc and Synstar Plc are likely to rise even if the companies make a small proportion of their sales in the U.S., said George O'Connor, an analyst at Old Mutual Securities in London.
``Companies like Guardian IT, which centralize those recovery systems, are going to allow investment banks or other financial institutions to get back whatever is lost because they have backups all over the world,'' Turkinan said. ``People will take lessons from this and will start investing in disaster recovery.''
Guardian made 97 percent of its first-half sales in Europe, and it plans to open an office in Lyndhurst, New Jersey, to pursue U.S. contracts.
``What one might expect from the disaster is that Guardian IT will increase their market share in 2001 and probably in 2002 worldwide,'' Turkinan said. He has a ``buy'' rating on the shares, which have fallen 64 percent this year. Synstar has fallen 4.2 percent.
Computer Associates
Computer Associates International Inc., the fifth-largest software maker, is offering free help to businesses trying to restore data and computers because of the destruction, Chief Executive Sanjay Kumar said. Affected companies may have back-up tapes or original data but lack skills to restore the information, he added.
Comdisco provides backup services for 22 customers with World Trade Center offices, the Chicago Sun-Times reported. Rosemont, Illinois-based Comdisco sent mobile units on tractor-trailer trucks to the New York area to provide computers, telephones and data links to customers, the paper said.
Comdisco has 35 customers that have made claims for disaster services, and 30 are working in the company's facilities now, Comdisco's Web site said. The companies, which Comdisco didn't identify, include banks, insurance companies, investment banks and brokerages.
IBM Responds
IBM, the largest seller of computers and related services, operates 113 disaster-recovery centers in 62 countries. IBM's customers for such services include Gillette Co. and
Eli Lilly & Co.
IBM had more than 1,200 customers in the World Trade Center or within two blocks of it and is delivering server, laptop and workstation computers to clients, Chief Executive Lou Gerstner told employees in a letter. IBM also is providing data-center space and relocating customers' operations to its facilities, he said.
Calls to Comdisco for comment weren't returned.
SunGard had 2000 sales of $1.66 billion, IBM had $88.4 billion, and Comdisco had $3.87 billion.
Unisys Corp., which sells computer services and hardware, had ``dozens'' of customers, including large financial companies, in the World Trade Center, spokesman Brian Daly said.
Financial customers lost computer systems, networks and software, Daly said. ``We're still assessing the impact.''
Unisys, based in Blue Bell, Pennsylvania, helps companies to manage computer networks and to integrate computer systems and software. It also sells server computers.
SunGard has 47 of the world's top 50 financial-services firms as clients, including J.P. Morgan Chase & Co., the company says.
Japanese Companies
Fujitsu Ltd., Japan's biggest business-computer maker, is ready to provide computers and services to its customers which were in the World Trade Center, Fujitsu spokesman Nick Hayashi said. Customers include Mizuho Holdings Inc., the largest bank.
Fujitsu hasn't decide how many computers to provide and whether to lease or give them for free, Hayashi said.
NEC Corp., Japan's biggest personal-computer maker, doesn't have customers in the World Trade Center buildings, company spokesman Chris Shimizu said.
Hitachi Ltd., which had a unit in the World Trade Center to support its computer users, couldn't be reached to comment because the company is taking a holiday.
Note: Be careful with Comdisco (CDO). It's in Chapt 11 (aiming for fast track exit from Chapt 11 in early 2002) and selling a major portion of its assets/services to relieve its debt load. I think HWP has already made an offer for a major part of CDO's technical services unit (bids on bankruptcy auction are in or being made this month). Nevertheless, CDO will likely see a major benefit from the Disaster Recovery situation. CDO last closed at 64 cents per share. Do your own DD. |
