Dear Gerald: Well, sigh....the 4th qtr 1999 and year are out. Wasnt as good numerically as I had hoped but at least they met the Street estimate of 14 cents a share for the qtr. Below is the writeup, which contains a lot of hope for this year as they are forecasting favorable comparable periods each qtr. JDN
Syntel Reports Revenues and Earnings; E-business & Application Integration Segment Grows 18%
TROY, Mich.--(BUSINESS WIRE)--Feb. 16, 2000--Syntel, Inc. (Nasdaq:SYNT), a leading e-business and application integration firm, today announced revenues and earnings for the fourth quarter and full year ended December 31, 1999.
Revenues for the fourth quarter 1999 were $41.1 million, a 3.9 percent increase over $39.6 million for the same period in 1998. Net income for the fourth quarter was, as expected, at $5.4 million, or $0.14 per share (diluted), compared to net income of $5.4 million, or $0.14 per share (diluted), for the fourth quarter 1998.
Revenues for fiscal year 1999 were $162.1 million, a 3.5 percent decline over revenues of $168.0 million for fiscal year 1998. Net income for the twelve-month period decreased to $21.5 million or $0.55 per share (diluted), compared to net income of $24.6 million, or $0.63 per share (diluted) for the same period in 1998.
Performance Highlights
"Nineteen ninety-nine was a year of transformation for Syntel. Our focus was on reinventing ourselves as an e-business solutions provider. We accomplished this, in part, through the re-skilling of our workforce as well as the strategic acquisitions of Metier and IMG," said Bharat Desai, Syntel Chairman and CEO. "In 1999, we achieved top-line growth of 18 percent in our focus areas of e-business and application integration services; these two areas represented 67 percent of our 1999 revenue. This will help drive our future growth as well."
"Gross margins for the fourth quarter and the full year remained very strong, the result of excellent delivery, particularly on fixed-price engagements, and a ramp-up in our focused revenue growth areas of e-business and applications integration services," said John Andary, Syntel's Chief Financial Officer.
Andary continued, "We have also maintained a very strong balance sheet, including almost $64 million in cash. In addition, the company has capacity for more than 1,200 consultants at our two Global Development Centers in India. We can ramp up very quickly as demand for services continues to climb without any additional infrastructure investment or lag time."
New Client Relationships
During 1999, Syntel initiated several key strategic relationships with new customers to provide e-business solutions and application integration services, including Kemper Insurance, School Specialty, Budget Rent a Car, Humana, as well as a multi-million dollar contract renewal with Blue Cross Blue Shield of Georgia.
In addition, Syntel is quickly growing its relationships with two new partners, SAGA and Aspect Communications, to provide enterprise application integration services to their clients. "SAGA and Aspect Communications have solid software package offerings in the Enterprise Application Integration (EAI) and Customer Relationship Management (CRM) spaces, they are both getting a great deal of attention in the marketplace for these offerings, and we should see strong joint sales opportunities in 2000 from the foundations we've built," added Desai.
Strong E-business Focus
"Our early transition away from Y2K services and into e-business solutions has positioned Syntel very well for the year 2000," said Desai. "Our Digital Blueprinting-Build-Optimize methodology ensures our customers the right solution, with full integration from the web through their enterprise. This ability and experience delivering a comprehensive end-to-end solution in the e-business space differentiates us from the 'pure play' Internet firms. In addition, our global model for optimizing applications after implementation with 24/7 support and consistent enhancements gives Syntel customers a very compelling value proposition."
Andary added, "Looking ahead, over 50 percent of Syntel's new business opportunities are in the e-business area, which we define as Web Solutions, Data Warehousing, CRM, and EAI. The combination of a strong opportunity pipeline and a workforce that has been re-skilled in new technologies should provide a return to favorable year-over-year revenue comparisons throughout 2000."
Syntel's transition efforts are catching the attention of industry analysts that follow the marketplace.
"As many systems integration and consulting companies continue to be plagued by their inability to transition away from Y2K revenues, Syntel demonstrates that it has landed with both feet planted in the future," said Julie Giera, an IT industry analyst with Giga Information Group. "Their strategy has paid off. Syntel is now strongly positioned to take advantage of the market for e-business consulting and planning; whilst other consulting organizations are still searching for the door marked 'Y2K EXIT'. "
New Web Incubator
Syntel recently announced a new web incubator program for the company to make investments in web start-up businesses and early stage web companies. "We see our web incubator concept as a powerful tool to increase shareholder value, attract and retain top talent, retool our workforce, and develop reusable components and processes that will provide us further leverage in the marketplace," said Desai.
The first two businesses from the Syntel web incubator program will market launch in the coming weeks.
One is a business-to-business e-service site (www.skillbay.com) that covers the entire lifecycle of IT-related contracting assignments over the Internet. Corporate buyers of staffing services post open requisitions for no cost on SkillBay.com and conduct real-time auctions in an open market setting. Sellers of staffing services are able to post bids on open requisitions and review competitive bids. In addition, SkillBay.com offers electronic billing and payment for services rendered. SkillBay.com also features virtual interviewing and a patent-pending talent-matching engine.
The second business is a vertical content portal (www.new2usa.com) geared to the millions of newcomers to the USA annually. According the US Census Bureau, more than 80 million people will move to the US over the next few decades. The site - which offers helpful how-to content, message boards, access to over 500 newspapers worldwide - is updated daily and provides advertisers and sponsors with a unique opportunity to connect with affluent professionals and college students coming to the US as they form initial brand relationships and make new consumer purchases. Syntel has an equity stake in both businesses.
About Syntel, Inc.
Syntel (www.syntelinc.com) helps leading organizations fully integrate emerging technologies to build their own Digital Ecosystems(SM). This is accomplished through a full suite of e-business offerings including web solutions and implementation, Customer Relationship Management, data warehousing/business intelligence, and application integration. With approximately 1,900 employees in 16 offices worldwide plus four world-class Global Development Centers in the US and India, Syntel is "The Architect of e."
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