Bill,
Quality of earnings? Are you suggesting that TAVA's reported earnings are fraudulent? Please tell us how you arrived at that assumption.
ACLY has seen significantly reduced revenue in the past year. I'm not as familiar with the company, but I believe they were, what might be called, a tool maker.
It has already generally been acknowledged that such software based companies would be suceptible to earnings decreases as we moved from remediation to testing of IT systems and that they would have difficulty making the transition to a non-y2k business environment.
However, I don't believe you are being fair in painting all System's integration/Y2K companies equally. Some obviously exploited the hype surrounding the issue to cash in on a short-term business opportunity.
However, others have dedicated themselves to using the "opportunity" that Y2K presented, hoax or not, to get their foot in the door with much larger companies in order to net post-Y2K work. KEA, CSC, CACI, CHRZ, CPWR, and many other leading systems integration firms have succesfully made this transition and balanced their contract portfolio with suffcient core business to offset any post-Y2K slump.
I would suggest that somewhere down the line, larger companies wishing to leverage TAVA's established Fortune 800 client base will see the value of having such an operation under their umbrella.
I don't quite believe TAVA will grow to become another KEA, but I certainly believe that they are successfully increasing their potential earnings power in a balanced and rational manner.
TAVA is not ACLY, anymore than BBY is CPU.
Each company must be analyzed individually and not lumped into an overall sector and forgotten. Overlooked companies often create some interesting value plays, especially if earnings back them up.
TAVA hired some 30 additional personnel in the past 30 days. Hardly a sign of a company in the depths of a major decline.
TAVA earned .25/share last quarter, .11/share more than the quarter before of .14/share. Now either that is impressive growth or it is a fraud.
I would like to know why you believe it is the latter (other than using some blatantly flawed comparison with a non-similar Y2K company like ACLY with different products and a different business focus).
Regards,
Ron |
