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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: Quad Sevens who wrote (14434)4/8/1998 3:05:00 PM
From: Mr Logic  Read Replies (1) of 31646
 
Wade, >><< if KO took 200 TAVA Y2K engineers - that they don't have - for the next year and threw in $3m for using the datbase it would only be worth $1/share (plus incremental business beyond 2000 of course). >>

Is that $1/share in earnings? Are you still conceding only a PE of 1 for y2k earnings?<<

Earnings, yes. $1,500/day, 250 days 80% billed utilisation, 30% net margin - fairly generous I think - works out at under $1 share.

The points I was trying to make here are:

1. Even making very optimistic projections - like TAVA could put 200 Y2K $1500/day engineers in there tomorrow and bill KO for $60m over the next twelve months - the bottom line for a blowout KO Y2k deal is not very big in relation to the stock price - $1/shr.

2. Double up the above to cover 24 months (still with engineers TAVA does not have, maybe add in the temps revenues to get the number up) and you are looking at a best case of about $2 in earnings for y2k services work before April 2000. Please try, but I really don't think you could be more optimistic than this.

Obviously incremental work they get with new clients and contacts above this beyond 2000 is on top of this but that is a tough one to figure out.

The biggest value they could get from this will be refernces. Not for more services - I assume in the above case that they have more work than they can handle - but for the CD. I would set aside a very large ad budget and advertise "We fixed Coke - here's how you can stay in business after 2000 too"
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