Reactions to confernce call . . . .
First, on my favorite topic, the INS, I listened closely. Here is what I took from Fowler's comments:
(1) IDX will recognize some INS revenues this quarter off of machines shipped last quarter. We don't know how much.
(2) IDX is not presently putting together a second shipment to the INS.
(3) On the discussion of the Request for Proposal (RFP, i.e., rebid), I am cautious. J. Saf tried to pin Fowler down, but I'm not sure he succeeded. Fowler has been "expecting to receive it" for the past three months. It sounded like there hadn't been a bid process at all since last year. But that's not what the INS guy told me; a bid process was cancelled in favor of more IDX stuff (the recent shipment of which was confirmed on the conference call). That bid may have been put aside three months ago, and then people would wait for a rebid . . . . but there still may not be one.
(4) The joker in this deck is why the INS should be so leisurely about buying and installing tenprinters. That makes no sense. Even if their budget allows post September 30 purchases, naturalization screwups like they have been having are hurting them a lot with Congress, and deserve to. There may be yet more contractor politics going on here, say, with the Minnesota (DBII) delegation and the California (IDX) delegation fighting it out.
(5) And, of course, still no sign of any competitor supplying the INS.
Next, the service revenue margin squeeze non-issue. Last quarter I analyzed this almost the same way Fowler described it on the call. The margins are low per unit shipped, but IDX indirect costs are virtually nil. The more GSA sales, the lower the gross margins for the company, but also the lower SG&A. It's about a wash. The only new complication here is that IDX is taking a cut from subcontractors of 3%. My wife has a small business with government contracts, and nothing makes her happier than taking a little of the top of a subcontractor's bill. Pure profit and no work. However, my next attempt to tease out TP-600 numbers from construction work will have to include the x-factor of subcontractors, and so I will have rougher estimates on this front.
Last, that cryptic O'Hare "byproducts" comment dealing with Oracle and IDX. I get the uneasy feeling that the apparently very successful O'Hare project may have saved the Oracle alliance while nothing has been selling. Just a feeling. |
