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Gold/Mining/Energy : HSS Hars Systems - Internet Travel -- Ignore unavailable to you. Want to Upgrade?

To: keith massey who wrote (72)	7/11/1999 1:28:00 PM
From: VisionsOfSugarplums	Respond to of 127

Hi, Keith. The post had tweaked my interest because I'd checked out the financials before (don't like to see declining revenues in a company) and it wasn't DDOTF (due diligence on the fly, subject to a high error ratio <ggg>). Margins are down a bit, but not substantially, and it appears the company has taken steps to improve margins by "bringing the reservation system in-house" (acquired from Intermezzo per the July 9 PR) which should "eliminate significant annual transaction expenses called for in the former Intermezzo service agreement". Reading the PR, it looks like there's also some revenue upside to that deal through "ResBook and the WebPMS product". It also looks like most of the new deals announced has been post Q2, so there may be some increase in revenues in Q3 and more likely in Q4 (since most of the PR's were out late in Q3). In case anybody's interested in margins (revenues less operating expenditures)as a percentage of sales: Q2 99 (Mar 31) 43.02% Q1 99 (Dec 31) 44.05% Q2 98 (Mar 31) 46.62% Q1 98 (Dec 31) 42.96% Obviously, this is a competitive industry, so I am looking to revenues as well for further growth. At this stage, HSS is still trading around a price/sales ratio of 1, which is good and something I always look at in a growth company (ie/how much of future growth potential has been captured in the price? - minimal at this point, using this ratio). The elimination of "significant annual transaction expenses" is obviously positive for net income. The development of the new web site should increase costs, however I would expect this to be an asset and not impact net income other than through depreciation. In some cases, HSS (through VIP) appears to be taking a subtle approach ("Today, we have officially entered the e-commerce game directly by announcing the development of our own site," said Kelly Blake, president of VIP. This site is not meant to compete directly with the larger megatravel sites. Instead, VIP's proprietary site will be designed for those hotel guests and car rental clients that have developed brand loyalty to a particular VIP product and for those customers that wish to book direct as opposed to utilizing a search engine, portal site or more traditional channel"). Don't know if this will increase the number of customers or customer loyalty, however I think it is a necessary/strategic/competitive move given the changes in today's business environment (internet). It is also a first step, if you ask me(speculation)- testing the waters. The Jun 16 PR is more indicative of revenue growth at this time, IMO: "Hars Systems Inc., through its subsidiary company VIP International, has signed 60 new hotel contracts since mid-April, 1999. This significant expansion includes 48 hotel properties in North America and 12 internationally" Also May 18: "Hars Systems, through its wholly owned subsidiary, VIP International, Corporation, has signed an agreement with Mirror Image Communications Limited (MIC) of London, U.K., to electronically distribute its hotel and car rental portfolio to tour operators and direct to corporate clientele using the MIC Internet based booking system throughout Europe". "VIP will be increasing its exposure to potential hotel and car rental bookers by more than an estimated 25 per cent. As a result, VIP expects significant increases in booking volume from the large tour operator segment and the lucrative corporate travel market in Europe." I imagine this alliance will continue even as VIP sets up its own site. European/Asian economic improvements also provide potential for upside for that deal. It's definitely a very interesting company. Canaccord and Nesbitt seem to be the main net accumulators over the past few months. I will be very curious to see where it goes in the future. Sorry about the long post - haven't been on the threads and had a chance to catch up somewhat. Have a great rest of the weekend! Regards, t.