Elliot:
Thanks for the info pertaining to IAIC's board of directors. Military connections
like that certainly can't hurt. I know that CA has a solid presence with goverment agencies, but Mr. Gruder at ALYD has been testifying and educating Congress and the House for a number of years prior to the Y2K info explosion.
I'm not suggesting its Alydaar's world and the rest are also rans. Well. . . yes I am. But as you know there is more business out there than anyone company can handle including Alydaar. In terms of marketing, I think Alydaar has positioned themselves to win a lion's share of the lucrative top end multimillion dollar contracts associated with Fortune 100 and 500 multinationals. Both here and abroad. I'm wondering how much of the corporate contracts that have close ties to government, like MD, will translate into govt contracts.
Y2k contracts will follow classic market segmentation. A relatively small(10%) but incredibly lucrative premium class of contracts($30 million and above) are available to companies that have the capabilities to handle multiple projects requiring assessment of hundreds of millions of lines of code in any language platform.
This premium class of contract would include the F500 companies (particularly the superegional banks, insurance co's and financial services firms)and the large government agencies and probably some of the large municipalities. Another 20% of the contracts will be $10 million to $1 million and the remaining 70% will be $1 million or less. The vast amount of revenue dollars are contained in the top 10% of available contracts.
I am aware that a number of other competitors, DDIM, VIAS, CHRZ, CRYSF have reported assessment contracts with a number of F100 co's including Ford, MCI, ATT, Coke. In addition to on-going significant new business announcements, I am betting that Alydaar may get more than a few paniced phone calls in the not too distant future from the IT professionals who have contracted with competitors who made promises that their conversion will be completed correctly and on time, but infact could not deliver said services.
This will only become appearant after the projects begin to stall or bog down 8 months into a 12 month remeditiation schedule. In short, there will be a rush to the door for many companies who find themselves mired in a half completed project with no one available to handle the change order, due to the volume of existing business. I can hear it now "You have reached Alydaar Software, your call will be answered in the order in which it was received, your wait time is approximately Dec. 31 1999." Please hold for the next available SmartCode representative." There will simply be too much business with too little time.
Hence, it is crucial to sign on with a company that has successfully remediated code that is already back in use and is guaranteed to perform as promised.
As you know this aint horseshoes. You get one shot or its fatal. You may have read the "scandalous" traders report released from CS First Boston on the newswires. In my opinion this tore the vail exposing legitimate revenue producing contracts versus assessment tool/ diagnostic licensing argreements. One says we'll fix your problem for this much, the other says your problem is this much. Big difference, but missed by most aggro-momentum investors who want any piece of the Y2k action. Even with all of the back peddling and scapegoating and threatening lawsuits launched by the respective companies it was a noteworthy news leak.
Many Y2k companies will result in profitable investments for their shareholders,(depending on when they buy and sell) I do not doubt that IAIC will post solid returns. The Y2K is a race with a few thoroughbreds and IAIC may be one of them. Alydaar is a name already familiar in the legend of equine racing and I expect when all is said and done their Y2K revenues will also be the stuff of legend.
With regard to Alydaar's shaky balance sheet, that is certainly a concern, but the CFO reported on the newswire that they will break even in 2Q97 and be profitable in 3Q97. I can live with a quarter or two of near term uncertainty in the face of 500% revenue growth. But everyone's risk tolerance is uniquely there own.
All the best.
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