CBSI-complete bus. solutions. new y2k play! Message Board

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Technology Stocks : CBSI-complete bus. solutions. new y2k play!

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To: av ram who wrote (456)	12/6/1998 10:09:00 PM
From: av ram	of 506

Sorry if this has been posted earlier but here is CREDIT SUISSE FIRST BOSTON report that was issued recently. I liked the second para most (bolded). "CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research-Americas Industry: Information Technology Services STRONG BUY Complete Business Solutions (CBSI) Summary * Research indicates an accelerating shift toward ESPs within the Fortune 2000 over the next five years. Own companies with a full service offering and a strong franchise customer base. CBSI generates 80% of revs from existing customers. * CBSI currently generates less than 12% of its revenues from traditional low margin contract programming business, down from 25% last year. Shift should generate higher gross margins, better retention, and ultimately higher valuation. * CBSI generates 80% of its revenues from existing customers, providing a full life cycle of services. Currently, CBSI has 60 clients with contracts greater than $1M generating $187M in annual revs vs 45 clients generating $130M last year. * CBSI utilizes two offshore development centers and several training facilities to reduce project cycle times and address talent short markets. Offices in India generate 50+% G/M and 20+% O/M, twice those of the U.S. * CLMT acquisition tracking ahead of expectations. Revenues up 4.5% sequentially, O/M up 300 B.P. to 11% and attrition rates declining. * New valuation methodology indicates benchmark ESP's should trade at nearly a 1:1 correlation to their gross margins, similar to S&P 400. Given CBSI's established franchise base and cross-sell opportunity, we apply a 10% premium arriving at a $41 six-month price target (1.1 x 34% x $1.10). Upgrading CBSI to a Strong Buy from a Buy."

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