Another competitor they beat was CHRZ on at least one of their contracts.
Higgins also mentioned that they have an alliance in the orient that will provide them the manpower they need as they ramp up. Of interest here is that they seem to have locked in their manpower costs, which could give them a huge competitive advantage when more companies freak out over the y2k issue.
They are currently bidding on work comprising 50 million lines of code -- not all in one place, of course. If their win rate stays constant, you can begin to see where their business could go.
I asked about beyond the year 2000. Higgins said that because of their comprehensive work on all of a client's software, they rapidly become the ONLY living expert on a client's total software picture which gives them the power of incumbency on any new software projects. He therefore believes that client relationships won during this period will be maintained for a long time.
They also see, like other y2k participants, that much of the world has been in a state of denial on the y2k problem, so that line pricing could rise dramatically when people try to get all their work done in a short span.
I've been trying to figure out what this puppy is worth, and you have to have pretty flexible valuation parameters. I would note that a company like ACLY hit about a $200 million valuation during the peak frenzy earlier in 1997 when their revenues were not much greater than Zmax currently.
One has to consider what the company's earnings potential is. I would guess that their current book of business (10 million lines of code) is worth about $5 million in revenues, taking a mid-point of the price range as average revenue per line. If they are fortunate enough to win half the business they're currently bidding on, you could probably estimate another $12-$15 million in revenues, with upside to that number if line prices rise.
Without going through all the hard math, I will say that I heard (not from Higgins) estimates of 50 cents in earnings for 1998 and $1.10 in earnings for 1999. I've not confirmed the source, but earnings releases from here on will tend to give a good picture of the ramp-up rate.
My ultimate conclusion, based on the fact that they've won in competition a few times already, is that they will become a worthwhile player in the group.
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