Dear robert,
I did not buy today based on any technical indicators. I currently own (with the purchase today) 8,000 shares of CSGI.
I purchased:
5,000 @ $6.625 ~ $33,125
2,000 @ $5.875 ~ $11,750
1,000 @ $4.250 ~ $ 4,250
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8,000 .................. $49,125
My current avg. is ~ $6.14
I plan to buy approx. 2,000 more shares by the end of the week.
It is my belief that most companies have been budgeting for their year 2000 projects Q2 to Q4 of 1997 and will start spending as we move into 1998. Consygen has done over 14 different pilots for various companies, including the Motorola pilots. As we move into the new year, I am expecting many of the companies and partners who have received pilots to come back with the full projects.
If you look at some of the articles I posted yesterday, you will see that it is clearly becoming harder and harder for companies to find programmers and, for those who have projects currently underway, to keep programmers.
IRS Is Losing Programmers
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exchange2000.com
>> The IRS lost 8% to 9% of its programmers in fiscal 1997. This comes at a time when the agency is struggling to fix its systems. It has 88,000 different program to repair. <<
Only 20% of the Largest US Companies have a Y2K Project
==============================================
exchange2000.com
>> The survey uncovered disturbing news about corporate progress with the millennium bug, as 82% of companies admit they underestimated the costs to fit the problem. Meanwhile, 95% said finding new staff to work on the problem has been "difficult or impossible." <<
I feel, as we move into 1998, companies trying to take care of their year 2000 problems in-house will realize the it will not be cost effective. Furthermore, time is running out and they will also feel the time constraints. We are already seeing the tool vendors such as PTUS and SEEC start to move up, as well as the end to end providers such as KEA. In fact, KEA ( which I own 3,000 shares of) just broke through $40 today.
However, once the flood gates open and the bulk of the business starts to flow in, it will become very clear that buying tools to take care of the problem won't be a good idea if you can't find the programmers to use them.
It is also my opinion that companies like KEA, who is currently using some of the various vendors tools, will have to turn code over to the conversion houses. The demand and the lack of available bodies will leave them no choice. We already saw CHASE come to ConSyGen and decide to wrap their services around the ConSyGen toolset and move towards the Automated Factory Approach. I feel that we will see other companies, as well as other Y2K companies, decide to use this approach for converting code instead of buying the tools and hiring programmers to use them.
Merril Lynch, the parent company of LSI (which ConSyGen signed a 3 Million line Y2K and Migration project with), currently has over 180 million lines of code that needs to be converted and they have hired over 100 full time programmers. From what I understand, they are using the PTUS tool and are only 1/2 way completed with the conversion phase (keep in mind that the code also needs to be tested ) If the IRS is having problems holding onto programmers and many companies just starting to address their problem can't even find any, I wonder how companies like Merril Lynch will be able to keep their staff, and at the same time, fight off the increase costs due to the rise in salaries that will result once the bulk of the business comes in.
I feel that we will see huge increases in project costs that will force companies to change their strategy mid way through the project, or have to take charges against their revenues to make up for the increase costs. Even if companies like Merril decide to go with the Keans' of the world, the code will still work its way to the conversion houses. The Automated Factory Approach will be the most efficient and effective way to have code converted.
We have already seen the problems in Asia play havoc with many companies earnings. ORCL (which I bought after it tanked 30% in one day) is a prime example. Now imagine how hard some of these companies, who have already warned their earnings will suffer due to the problems in Asia, will be hit if the have to take charges to deal with the Y2K. We may even see companies who have even started early like Merril, have to take charges to deal with the added costs of dealing with the Y2K, never mind the companies who haven't even begun or have only done assessments.
I have stated several times that the focus will turn from "how large is your exposure to Asia?", to "how large is your exposure to the year 2000 problem?"
The Automated Factory Approach is what will be in demand. ConSyGen has a very low burn rate and it will take only 1 or 2 large projects of several small ones (3 to 5 million lines each) for them to turn a profit. I feel that CSGI has a good toolset that works and it is just a matter of time before some of the companies who received pilots come back with the full projects. Some of their alliance partners have clients who are in the Fortune 500, and I expect some large contracts to start coming out as we move into Q1 and Q2 of 1998.
I have decided to invest approx. $60,000 in CSGI and stay tuned to see what happens. I am buying now, because I feel that the closer we get to the new year the greater the chace will be for projects to be awarded. I plan to buy approx. 2,000 more shares, and I plan to do it before the end of the week.
If you wish to buy CSGI on a purely technical play, then I suggest you wait until a definite buy signal.
best of luck. |
