PCSS, FYI:
Thank you very much for the summary. Based on what you guys provided, this is my two cents:
1. Deutche Telecom contract is a big deal. Looks like ISLI has gotten a strong handle in the telecomm industry - MCI, Sprint and now DT, one of the largest phone companies in the world.
2. DST Systems is one of the better known systems integrators catering to the mutual funds industry and banks. This is not only a big deal for the near term but a continuing flow of revenue.
3. MCI/Worldcom - I think it's a nonissue. Fact - ISLI is trying to position itself as an application renewal business. Fact - Worldcom is basically a multitude of acquisitions of somewhat disparate companies like MFS, Wiltel, etc. Fact - MCI simply has more technological prowess than Worldcom - MCI is the largest Internet backbone provider, and the employer of the great Vint Cerf. It's most likely that the decisions on technology outsourcing will still rest with the original MCI guys than the new Worldcom people (remember the retention bonus package MCI publicly talked about when the m&a was announced). In other words, IMHO, 95%+ chance that ISLI will keep the business and grow it substantially in the coming months.
4. If ISLI manages to make $55-57 mil in the current quarter, that is a 14%+ sequential increase from last quarter. That means the rule of thumb pe should be at least 50 considering this level of growth will continue for the next couple of years. The estimated earnings for fy 1998 is $0.75. That tells me the stock is a screaming buy upto $25.
5. Let's look at VIAS for a second. Even at the currently battered level, VIAS's psr is more than 3.0. Based on a ttm sales of $186 mil for ISLI, a meagre psr of 3 would give this stock a more than $550 mil market cap and a $26 stock price without even considering the growth prospects.
I am amazed to see that the street is not recognizing this little gem. The last cc was a disaster, courtesy ISLI's talking up the Asian crisis. This one although was full of important information, I wonder if the info was effectively conveyed. I guess, we'll know in the morning.
Thanks for reading this far.
-Seb
ps. I am a longtime long and getting impatient looking at the appreciation of a somewhat competitive pack of MAST, IMRS, KEA & SYNT. |
