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Technology Stocks : Data Dimensions -- Ignore unavailable to you. Want to Upgrade?

To: Randomm who wrote (4309)	3/6/1998 12:47:00 AM
From: Risky Business	Read Replies (2) \| Respond to of 4571

You guys better read this: Data Dimensions faces tough times as investors shy away by Roger Madoff Bloomberg News Data Dimensions, a year 2000 consulting company, may find it difficult to win back investors, even as it trades at one of the cheapest valuations since 1996 while some of its peers soar to highs. The Bellevue-based company plunged 64 percent since its Oct. 10 record and closed yesterday at $13.75, down 18.75 cents. Investors are smarting from disappointing sales of Ardes 2k, an electronic tutorial on year 2000 problems, which was billed as a must-have for companies and governments reprogramming their computers to understand dates past Dec. 31, 1999. Annette Geddes of Spears, Benzak, Salomon & Farrell, said she isn't likely to be drawn back into the shares. The company's expertise of giving guidance isn't what is in demand, she said. Now, Data Dimensions is changing its focus. For the first half of 1998 at least, the company will concentrate on advising companies about methods for fixing year 2000 bugs, Chief Financial Officer Gordon Gardiner said. Although Data Dimensions said it offers a "soup-to-nuts" solution for companies' year 2000 problems, some analysts are skeptical about whether Data Dimensions can compete with rivals that have longer track records. Ian Hayes, founder of Clarity Consulting, which also focuses on the year 2000, said Data Dimensions may suffer from questions of its viability. "Companies are hesitant to use them beyond the early stage," Hayes said. Analysts also are concerned about the company's costs. Data Dimensions' gross margin, profit divided by sales, in the fourth quarter slipped to 37 percent from 45 percent in the same period a year earlier. Gardiner expects the figure to be back above 40 percent this year. To be sure, Data Dimensions' year 2000 consulting contracts boosted sales 128 percent to $20.8 million in the fourth quarter. Consulting contracts continue to roll in. The company said Tuesday that it will work with Polaroid on year 2000 project management and reprogramming the computers that run the world's largest maker of instant photographic products. Data Dimensions hasn't given up on Ardes 2k, Gardiner says. On Dec. 1, the company named Thomas Clark to spearhead its Knowledge Transfer group, which includes Ardes 2k and other software products. Still, Gardiner remains cautious about the group's sales for the first half of this year, a switch from a few months ago. As for the current quarter, Gardiner said he won't back analysts' estimate of 11 cents a share because the company still is looking for ways to cut costs from this year's budget. Analysts aren't waiting for a turnaround. Avalon Research Group put a "sell" recommendation on the stock after the company reported earnings on Feb. 18, and Punk, Ziegel & Co. reduced its investment opinion to "market perform" from "buy" the next day.