News story . . .
Wednesday September 16, 6:06 pm Eastern Time
Geac stock surges after good results
TORONTO, Sept 16 (Reuters) - Investors took a shine to software maker Geac Computer Corp. Ltd. on Wednesday, sending its stock up by 17 percent following a surprisingly strong first quarter showing.
Shares in the Markham, Ont.-based medium and large-scale computer systems sales and services firm rose C$5.15 to C$35.10 on turnover of one million shares after midday. Wednesday's price was above a 52-week low of C$25.75 but far below a high of C$62.25 in the same period.
Investors welcomed its first quarter profit of C$38.6 million or C$0.60 a share, which cleared the bar set by analysts at C$0.54 a share, said Yorkton Securities analyst Mark Pavan.
A year ago the company earned C$0.49 a share or C$30.8 million in the first quarter.
Pavan added that analysts would be busy revising their earnings forecasts upward for the rest of fiscal 1999. ''There's really no red flags in the numbers that anybody can see, and it looks to be a fabulous quarter, so I think you're going to see guys bring the numbers back up.''
CT Securities analyst Pierre Boucher agreed, adding: ''Certainly we're going to see an upward trend in street consensus.''
Boucher said Geac's shares slumped after the last quarter, when Geac President, Chief Executive and Chairman William Nelson provided a cautious outlook.
''The company beat expectations yesterday for its first quarter results,'' Boucher said, after being put ''in the penalty box for a while here.''
Last time ''people chose the most pessimistic of interpretations,'' Pavan added.
Wilson was clearer when he last spoke to analysts about 1999 prospects, Pavan said.
''This time he was much more definitive. He talked about industry growth rates being 30 percent, and he talked about thinking it was reasonable that Geac could kind of look at those type of growth rates in their variable business, so that inferred a kind of internal growth rate of 15 percent, year over year,'' Pavan said.
Boucher added that the stock could be playing catch-up with a recent run of positive developments including Geac's acquisition of Virginia-based Interealty Corp., which supplies real estate information systems.
''People seem to be regaining confidence in the story,'' Boucher said.
Pavan noted that Geac management hinted more acquisitions were in the offing. ''They did say that recent decreases in the stock market have opened up a whole bunch of opportunities that normally would not have been available.''
Geac, which grows much of its business by buying other firms, usually uses cash or debt, Pavan noted. Geac reported a cash balance of more than C$215 million and unused credit worth about C$100 million.
But Geac management holds its cards close to its chest and rarely divulges its targets, Pavan said. ''I've never been able to guess right yet and every time there's a rumor out it's wrong.''
($1 = $1.51 Canadian)
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