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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: Karl Drobnic who wrote (27376)2/3/1999 11:56:00 AM
From: Mr Logic  Read Replies (2) of 31646
 
Karl, there are an awful lot of assumptions here.
If we credit TAVA with $80m current sales - based on $20m last Q rather than take the $56m trailing sales - then at $7 1/2 they trade at about 2 x sales, 15 x earnings. It is hard to see how they will acquire good fit accretive companies at 0.1 x sales as you suggest, and even harder to see how they will multiply the value of those acquisitions twentyfold to match TAVA's own ratios. And that's at a $7 1/2 price.

The 'torrent of cash' and $1 earnings is also very speculative - we still need to see the money here.

TAVA's #1 issue absolutely must be to plan the transition from the 'easy money' profitable Y2K work. If I were long (I have no position long or short) I would want to see real evidence over the next few months of TAVA reducing Y2K as a % of overall revenues as they undergo transition to a very different company in 2000 and beyond.
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