(UPDATE) TAVA's Shares Soar 28% Amid Publicity, Market Rebound
Dow Jones Online News, Tuesday, August 18, 1998 at 21:48
DENVER -(Dow Jones)- Shares of control-systems integrator TAVA
Technologies Inc. soared 27.5% Tuesday, extending Monday's 8.5% gain,
amid recent good publicity and an overall stock-market rally.
TAVA spokesman Scott Liolios attributed the rise to an Aug. 13
reiteration of a "buy" recommendation by Hanifen, Imhoff analyst Russell
Welty in Denver; an Aug. 16 interview with TAVA Chief Executive John
Jenkins in the Venture Returns newsletter; and a rebound by the stock
market and by companies tied to solving so-called year 2000 computer
problems.
Many older systems recognize years only as two-digit numbers, and
can't distinguish between centuries. The problem, also known as the
millennium bug, could cause businesses, governments, banks and other
organizations major headaches in the year 2000. Without specialized
reprogramming, systems will think the year 2000 - or 00 - is 1900.
In his update, Welty said he was very comfortable with his
fourth-quarter estimate of $15 million in revenue and four cents in
earnings per share. In the Venture Returns interview, Jenkins emphasized
that the prospects for the company are "better than ever."
The Y2K index, an index of companies that provide year 200 solutions,
rose to 215 Tuesday from 204 on Friday, Liolios said.
TAVA Chief Financial Officer Doug Kelsall agreed that the Hanifen and
Venture Returns publicity both contributed to the upswing, and he
speculated that buyers jumped on the bandwagon once the stock started to
move upward. "I think there was just some rebound buying," he said,
noting there is no new news from the company.
TAVA stock has been clobbered over the last several months along with
others associated with Y2K. TAVA shares fell from a high of nearly $15 a
share in April to a close of below $5 a share on Aug. 13. TAVA shares
closed Tuesday at $7.094, up $1.531, or 27.5%, on volume of 1.5 million,
compared with average daily volume of 523,901.
Englewood, Colo.-based TAVA sells and integrates hardware and
software manufacturing systems, and Liolios said it has unfairly been
lumped with Y2K companies because it has a broader base than its Y2K
business. Even so, Y2K is important to TAVA. In its fiscal fourth
quarter ending June 30, it received $25 million in orders for year 2000
tools and services.
TAVA has been a leader in warning manufacturers of potential year
2000 problems in their manufacturing processes, including potential
problems in programmable logic chips in flow meters and other devices.
TAVA introduced a Y2K product called Plant Y2K One in July 1997. The
year 2000 problem has been a good vehicle for introducing new clients to
its core business.
Ken Trbovich, associate director of research for The Red Chip Review
in Portland, Ore., agreed that TAVA is more than its year 2000 product.
However, the company has "not consistently delivered," sometimes falling
below earnings or revenue estimates, he said.
In a June 16 report, for instance, Trbovich said TAVA's third quarter
ending March 31 fell short of his revenue estimate. TAVA had
third-quarter revenue of $11.7 million, compared with $11.2 million for
the year-ago quarter. Earnings were $301,000, or 1 cent per diluted
share.
-By Tom Locke; 303-293-9294
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