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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Woas who wrote (12638)	3/16/1998 8:24:00 PM
From: Zebra 365	Read Replies (1) \| Respond to of 31646

Five Degrees off dead center. ******NOT REALLY OFF TOPIC************ Those of us who are long TAVA in what I think will be later thought of as "the beginning" are here for this reason. Though this article is about Keane (KEA) (of the exchange formerly known as "Prince", oops, "AMEX") it gives a very good picture of what we are looking for in Y2K and TAVA. Using Year 2000 as a Springboard By now, nearly everyone has heard of the Year 2000 bug and the story of how companies will be spending billions of dollars to fix it. A key question is how the companies offering Year 2000 solutions will fare once the crisis passes. Keane (AMEX:KEA) has shown great success in cross-selling its non-Year 2000 strategic services to customers. Oh, and by the way, the stock is up 15,600% in the past ten years.** That's right, a few weeks ago the Wall Street Journal named Keane as the Best 10-Year Performer on their Shareholder Scoreboard, yet few outside the industry have even heard of this computer services firm. Keane offers comprehensive outsourcing solutions for companies that are quickly realizing they can't handle their information technology (IT) needs internally. These Fortune 1000 companies are discovering they are not only ill-equipped to deal with problems like the Year 2000 bug, but that service firms like Keane can provide better long-term management and development of their IT systems for improved productivity. Just as importantly, Keane has the high-tech talent which is so scarce these days. In other words, even for companies willing to spend big bucks to hire additional programmers and IT project managers, they're having a tough time just finding potential new hires. Keane was one of the earlier entrants to what is now a frenzy of Year 2000 solution firms. Keane has over thirty years of experience in software services, and in 1995 it began looking at the millennium issue. The company recognized that despite the universal nature of the problem (i.e. that with dates using two digits for the year, the "00" will be read as 1900 instead of 2000), there are no shrink-wrapped magic bullets to solve the problem. A solution requires a specific knowledge of a company's information systems as well as the expertise to manage it. Getting to know a clients IT systems and developing specific software applications and system management solutions is exactly what Keane is all about. With this in mind, Keane is not only well-positioned to land a lot of Year 2000 business, but well-suited to turn those Year 2000 jobs into more extensive, long-term service contracts. 90% of Keane's business is from repeat customers. The Year 2000 problem is also raising awareness among management at many companies that they don't have a core competency in information systems management, and outsourcing is the way to go for Year 2000 and beyond. In essence, the Year 2000 bug is a springboard for Keane's future growth. The company cross-sold $215 million in other strategic services to its Year 2000 clients in 1997, accounting for a third of total revenues. Keane also just implemented a sales incentive plan that encourages cross-selling of non-Year 2000 services, bolstering confidence among Wall Street analysts that Keane will successfully make the transition beyond the millennium.. Analysts also like the company's "earnings visibility," in other words Keane's future profits are easier to anticipate compared to other businesses because they have long-term contracts producing a steady stream of revenues. Last month Keane reported better-than-expected results for the fourth quarter, and analysts bumped up their estimates for the coming years. 1997 revenues rose 40% and earnings per share jumped 79%. The First Call consensus for 1998 is for a 41% increase in earnings, and the long-term growth rate is expected to be 35%. The stock is trading at a Price/Earnings ratio of 48 using '98 estimates, so it's not exactly a value investor's dream. But momentum investors surely like the looks of its relative price strength at 97 (meaning it has outperformed all but 3% of other stocks in the past twelve months) and earnings per share rank also at 97, according to the Investor's Business Daily stock tables. Keane's stock hit a modest period of consolidation last year, but it is back in a strong uptrend now. The big picture for this stock will surely be dictated by how well Keane manages to leverage its Year 2000 business into more extensive, long-term service contracts. As for the next few years, though, the millennium bug is a wild card with a lot of upside potential. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' It is a little presumptuous to say that TAVA will be the KEA of embedded systems, but I ask you, if not TAVA, then who? Zebra