Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : GEAC.....Canadian best kept secret -- Ignore unavailable to you. Want to Upgrade?

To: PlayTheKing who wrote (794)	6/17/1999 10:17:00 PM
From: Jules V	Read Replies (1) \| Respond to of 1571

nationalpost.com Thursday, June 17, 1999 Geac still has acquisition ace in hand Larry Macdonald Financial Post >OTTAWA - With a price-to-earnings ratio of nine, Geac Computer Corp. (GAC/TSE) shares are a bargain. Yet the company remains well placed to continue plying its successful growth-by-acquisition strategy of past years -- in part because it has $230-million in cash on the balance sheet and lots of acquisition candidates available at cheap prices. In the months ahead, the search for takeover targets will likely shift into high gear now that the company has completed its transition to new management. Douglas Bergeron officially took over the positions of president and chief executive in April. Previously, he was CEO at one of the largest software firms in the world, Sungard Data Systems in Pennsylvania. . . etc etc . . Over the second and third quarters of 1998, however, Geac share prices retraced much of their earlier upward trend. The fear Geac's mastermind, Mr. Sadler, was going to leave the company was a cloud hanging over the company. This concern first surfaced in the summer of 1996 when he resigned as CEO to become vice-president in charge of acquisitions. It resurfaced in August, 1998, when an information circular revealed he would not be pursuing re-election to the board of directors at the next annual meeting. Last month, the rumour mill was put to rest when Mr. Sadler announced he was leaving. Share prices also took a hit last July when the company cautioned analysts to expect flat earnings growth in fiscal 1999 (year end is April 30) unless a major acquisition occurred. Analysts had been quite bullish on the company, so the warning zapped a main support propping up share prices. Nor did it help for all this negative news to come out during the summer months of 1998 when the market as a whole was collapsing. The Asian crisis and the spectre of global deflation were in full flight then, and few stocks were able to withstand the stampede out of equities into the safety of cash and treasury bills. In February, Geac shares were rallying nicely off their summer lows when the company surprised the market with an earnings warning. Company officials said that third-quarter profit due the following month were expected to be 25% lower than the same quarter a year earlier. In February, Geac shares were rallying nicely off their summer lows when the company surprised the market with an earnings warning. Company officials said that third-quarter profit due the following month were expected to be 25% lower than the same quarter a year earlier. The news caused shares to plunge almost 40% in a day to just above the $20 mark. Geac said that the slowdown in earnings and sales was related to the company's offerings of Enterprise Resource Planning (ERP) software products, which businesses use to manage their inventories, payrolls and other functions. It appears that customers shifted their computer budgets away from ERP software products towards products and services that deal with the millennium bug. The prospect that the next two or three quarterly earnings reports could continue to be dampened by the Year 2000 computer problem seems to be the only explanation for why Geac shares remain in the bargain bin. But this should be a short-term factor: Once into the new millennium, companies should be shifting their computer budgets back to buying ERP software. Demand for ERP products will likely take off again by this time next year. In fact, there could be an extraordinary surge in spending because of pent-up demand. . . . . continues.......