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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: Zebra 365 who wrote (12589)3/14/1998 12:58:00 PM
From: STLMD  Read Replies (1) of 31646
 
Zebra, this talk of y2k income assigned a pe of 1 flies in the face of other companies that sell service or consulting work. The best example I can give is in my area of expertise, medicine, where physician management companies have been getting pe multiples of 30-50 based on growth alone.
The capital they have raised to finance these acquisitions of physician practices can be analogous to the capital raised by TAVA in y2k . With capital expended on acquisitions, TAVA's base business growth can be 50-100% per year if my estimates of gross revenues from y2k are accurate. This will then allow the company to downsize redundant overhead, increase profit margins, grow base business and thus justify the high pe multiples.
Jenkins(and restated so often by Karl Drobnik) has let everyone know that this is the business plan. If no acquisitions occur, if no economies of scale occur, if no growth occurs in this market(est 15% per annum) then I agree with the pe 1 proponents.
After investigating the management team and the fragmentary SI business in this country and overseas, I doubt the business plan will fail. Hope this puts an end to the "doldrums" and "doubts" during these low trading days. Stephen
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