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Gold/Mining/Energy : CGI Group (GIB.A) -
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To: Praxis who wrote (974)2/5/1999 10:50:00 PM
From: BM  Read Replies (1) of 1673
 
Praxis, you seem to have gotten your full 60 cents worth from today's Globe & Mail, and especially the featured piece on CGI.

Of course CGI is fully valued based on current contracts - of course it won't break out any time soon based on current contracts alone - acquisitions are essential and inevitable. This is not rocket science, the trend to consolidation is a clear trend. But nobody who understands the company and the industry expects that CGI will stand still otherwise we'd all be better off cashing in and buying bonds.

I find the fear of the backlog issue amusing. Let's say I get a contract to run a computer for the next 10 years. I now have a "hefty" backlog of 10 years worth of work. But I am only one person - can one person possibly handle a backlog of 10 years worth of work? If the person gets to do it one day at a time over the next 10 years, I don't think it's much of strain. CGI's hefty backlog is mainly this scenario repeated 1000 times over - it's not as if they have to go out and hire thousands of people - getting the staff was part and parcel of the takeovers.

While you have great confidence in the management skills of Mariusz Ryback (and I really hope your confidence will be rewarded someday), I think Serge Godin and the CGI team have already demonstrated their ability to grow shareholder value in a spectacularly successful way in the here and now.

Is CGI now doomed to grow at about 10% per year from now on? Personally, I don't think so - the ticker symbol "GIB" means far too much at a personal level to the people who have made this company an exceptional one.
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