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Technology Stocks : Trading TAVA
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To: Skeptic who wrote (146)2/23/1998 2:02:00 PM
From: Jack Zahran  Read Replies (1) of 655
 
Skeptic, the problem with your previous statements is that you are not stating them within the context of TAVA's entire core business. What I read from your statements is that the companies revenue will decrease after 2000 thus we can't ascribe a P/E ratio for the Y2K revenue of more than 1. I totally disagree with that and I feel such statements are naive and short-sighted. (Please do not take this personally.) I think some have just drawn that conclusion without giving it much analysis.

John Jenkins feels that Y2K will add to the core. I absolutely agree. Now the question is how much will it add after 2000. I belief it will add volumes of revenue. Why? Because, the Y2K client is a client period. The Y2K client however will be in a more desparate situation after 2000. Why? Because of the backlog of work that could not be done waiting for Y2K remediation to complete. Who will get this work? Most likely the Systems Integrator that can provide the most cost effective solution and already has demonstrated their abilities.

There are a couple of dynamics going on here and I believe we need to think it through in our analysis. I already mentioned the growing backlog of work caused by Y2K remediation. Another, the supply-chain paridigm shift to automation. This will force the Systems Integrator to have the Multi-plant expertise as well as inter-regional infrastructure. Must independent SI firms are small engineering shops in one locale. The requirements of the multi-plant, outside supplier manufacturers will be to use a national if not international SI such as TAVA. How many SI's compete with TAVA on the national scene and how many of them are truly independent of a particular solution? I believe only TAVA.

There are more dynamics in play that point to a huge marketplace for TAVA. They hold a very prestigious client list and now are becoming intimately aware of their clients operations. This kind of knowledge translates into more work. The Y2K work is an enabler that is validating the place of TAVA as the premiere Natiotional SI. They are poised to monopolize the National SI marketplace. Y2K is giving them the funds and drive to do this.

We cannot ignore the bigger picture. It would be misleading to focus on Y2K as one shot revenue. The Y2K work is only increasing their base and allowing them to segway into the plethora of work that will be backlogged due to the Y2K problem as well as the trend to Outsource.

JZ

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