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Technology Stocks : Cognicase (COGI, T.COG) - Integrated IT Solutions

COGI 4.550

+8.3%

Jul 18 5:00 PM EST

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To: Josef Svejk who wrote (94)	3/11/1998 12:29:00 AM
From: BM	Read Replies (2) of 843

Josef, some add-ons to your notes re the call >> Adding staff continually, COGIF has good reputation, 100-200 more planned additions. Cognicase has a ready supply of expert COGNI-2000 users due to their partnerships with two Montreal-area CEGEPs (junior colleges) so resourcing may be less of a problem for them than other companies. COG provides the school with the software so students graduate and can be productive in the tool almost immediately. Good move! Attractiveness of their staff to other US companies who are raiding other companies? No major concern with Icotech staff who are predominantly francophone and unlikely to relocate to the US. Hexagon's staff may be a more serious target - there are plans to do something about retaining all key resources - perhaps as soon as this Friday's AGM when mods to the stock option plan are expected to be passed. >> Regarding further acquisitions, an example of a company Cognicase may be looking at would be a testing tool company, to round out COGIF offerings. COG is developing COGNI-Test, a back-end testing tool. They might be interested in acquiring a company with a front-end testing tool to complement theirs. I also thought I heard the possibility of a document management and/or workflow software company to go along with the enterprise intelligence etc. expertise acquired with Hexagon. Positioning for post-2000 work now - another good move. The company re-iterated that even now, Y2k work is only 25% (will increase to 35% with SHL contracts) of current workload - migration is the major service being provided. Some other notes: - run rate is now $50 million CAD over next 12 months; overall profit margin expected to be 20% (not absolutely sure if I heard this right) - on direct Y2K contracts, gross profit margins are 50-60%; on sub-contracts they're about 35% - hoping to acquire some maintenance contracts (a cash cow as well-run outsourcing companies know only too well). Do you suppose there can be any more good news between now and the AGM on Friday?

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