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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: macduff3 who wrote (75600)	12/16/1999 10:46:00 AM
From: bobby is sleepless in seattle	Read Replies (1) \| Respond to of 120523

PER...gone fishing... URL: cbs.marketwatch.com Perot Systems' revenue grows Key contracts also send stock up By Lisa Sanders CBS MarketWatch Last Update: 3:23 PM ET Dec 7, 1999 Commentary Join the discussion DALLAS (CBS.MW) -- Dallas-based Perot Systems' stock has been up recently on the strength of several key contracts and a 121 percent gain in third quarter profit which was posted in November. During that month, the information technology systems company signed four strategic agreements designed to grow revenues. They'll be providing technical consulting services, e-commerce programs and communications systems for companies like ADAC Health Care Information System, Nortel Networks (NT: news, msgs), German insurance company Hamburg-Mannheimer, and Harvard Pilgrim Health Care. CBS.Marketwatch.com talked to Perot Systems (PER: news, msgs) Chief Financial Officer Terry Ashwill about his plans for future growth. CBSMW: Your profits in the third quarter were up 121 percent. What precipitated that gain. What is the expectation for quarter four? Ashwill: Our strong earnings per share growth for the third quarter is the result of both a growing business and expanded profit margins. Perot Systems made great accomplishments during the first 9 months of 1999. We completed our initial public offering, raising net proceeds of $108.1 million. We formed key strategic alliances providing Perot Systems with enhanced technological capabilities and channels to new geographic markets. We increased our training, recruiting, and bonus plans yielding significant reductions in attrition. We achieved all-time high margins as a percentage of revenue for gross profit. We delivered three straight quarters of 50 percent-plus year-to-year EPS growth. We increased cash to $263.2 million and 44 percent of total assets. And, we signed the second-largest contract in the company's history, a 10-year contract with Harvard Pilgrim that should exceed $700 million in revenue. We have signed important contracts during the fourth quarter and look to continue this momentum. EPS growth for the fourth quarter should be in the range of current First Call EPS estimates.(14 cents per share) CBSMW: Talk about the deal with Harvard Pilgrim Health Care. Ashwill: Being valued at more than $700 million over ten years, the contract with Harvard Pilgrim Health Care is the second largest contract in Perot Systems' history and, strategically, is precisely the ideal model for our large deal prospects. The relationship began with a call from Harvard Pilgrim to a senior executive of Perot Systems, which led to a management consulting engagement. As part of the consulting services for Harvard Pilgrim, we proposed a comprehensive turnaround plan for the HMO. In October, Harvard Pilgrim chose Perot Systems as their technology partner. We are helping Harvard Pilgrim to implement their turnaround plan, which includes new technology, Internet, and e-commerce initiatives focused on increasing operational efficiencies, improving financial performance, and streamlining healthcare provider services. CBSMW: What does the future hold for Perot Systems? When can the market expect the next big announcement? Ashwill: Perot Systems' future looks strong. We have already posted record financial results during 1999 in terms of consecutive EPS growth rates and profit margins. We look to build on this solid performance by continuing to expand our business with new contracts focused on transforming our clients' businesses. CBSMW: Your IPO was Feb. 22 and was by all accounts successful. What prompted the decision to go public? How does the company enhance shareholder value? Ashwill: We decided to go public as a means to provide our employees with a scorecard in terms of stock price, which provides a measurement of our performance as a company. With over 80 percent of our employees holding stock or stock options, the Perot Systems team benefits when our shareholders benefit. Our personal interests are aligned with our shareholders. To enhance the value we create for shareholders long-term, we focus on growing our business through long-term relationships based on high value services such as business consulting, systems integration, application development, and e-commerce services that have an enriching affect on our margins. CBSMW: What do analysts generally rate Perot Systems and is the stock trading at its value? Ashwill: Initially after our IPO, the stock traded on emotionalism. Months after the IPO, people who invested in the stock called to ask us what business we were in and what services we provide. Today, the emotionalism has disappeared and our stock trades at a strong price-to-earnings multiple for our peer group, reflecting the consistent financial performance we have delivered. CBSMW: What is the most important thing for investors to know about Perot Systems? Ashwill: Perot Systems is a very well run company and is in sound financial condition. We are committed to building a business for the long-term and delivering consistent financial performance. We are not about hype. Perot Systems is about delivering results for our shareholders. CBSMW: Everyone always wants to know about Ross Perot. How much of a role does he play in day-to-day operations? Does he plan another run for the presidency? Is that distracting to the company or does it increase exposure in a positive way? Ashwill: Ross Perot is very active in the daily operations of Perot Systems as CEO and has not indicated that his role will diminish. As the founder of this industry, Ross Perot's experience and leadership has had a positive impact on our company's direction and performance and we look for that to continue in the future. CBSMW: What is Perot Systems greatest competitive challenge? Ashwill: In today's business environment, technology is moving at a rapid pace. We must continue to evolve our capabilities and solutions in order to meet these changing technological needs. Success is never final. In our first eleven years, we have been successful at evolving our capabilities and offerings as demonstrated by our strong growth rates. Perot Systems is a provider of high-end technology and business solutions. Tomorrow's success will come from our continued ability to evolve our services to meet market needs.