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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Steve Woas who wrote (11733)	5/24/1998 1:28:00 AM
From: BM	Respond to of 13949

"everyone -- investors, brokers and analysts -- sitting up straight in their chairs and hanging on to her every word." This may explain why CGI Group has been on such a tear - the mainstream investment community is finally starting to become aware of the story. Here's an extract from Keith Woolhouse's Investing column which appeared in the May 20, 1998 Ottawa Citizen. ============= Now, guess what company produced these figures: - In the first six months of fiscal '98, ended Mar. 31, it increased revenue by 192 per cent to $259 million. - Its net earnings grew by 343 per cent to $11 million, or 20 cents per share, versus seven cents per share a year previously. - Its net profit margin increased to 4.3 per cent from 2.8 per cent. In the same period, its cash flow increased 367 per cent to $29.1 million. - Its order backlog has soared from $175 million in September 1996 to $1.5 billion today, and with the completion of a deal in a month or so, it will stand at more than $4ú5 billion. The company's shares spilt two-for one last August, they split two for one again in December and they are splitting two-for one again tomorrow [May 21]. The company is CGI Group Inc. (GIB.A/TSE), a Montreal-based information technology company that is experiencing explosive growth. CGI Group was represented at a recent technology conference in Montreal presented by Groome Capital Inc. Representing CGI was Paule Dore, and her presentation and the figures she disclosed were little short of dynamic. They had everyone -- investors, brokers and analysts -- sitting up straight in their chairs and hanging on to her every word. CGI is acquiring Bell Sygma Telecom Solutions and Bell Sygma International operations. The agreement includes a ten-year contract valued at $3 billion under which CGI will develop and maintain Bell Canada's international information systems. CGI acquires Bell Sygma in exchange for 8.6 million preferred shares valued at $22.98, convertible one-for-one into Class A subordinate : voting shares. The deal will make CGI the sixth-largest IT services company in North America CGI recently secured a $100-million five-year outsourcing contract with the Credit Union Central of Canada. Ms. Dore checked off some other contracts the company has secured in the last 12 months: - A $250 million, ten-year full IT outsourcing contract with Westburne Inc. - A $100-million, 5-year outsourcing contract with Co-Operators Group. - A $150-million, ten-year contract with Quebec credit union network Desjardins. This, hinted Ms. Dore, is just the beginning. Future growth will be fueled by acquisitions, which are not difficult to find in the IT industry. In Canada, the top five information technology companies account for only about 15 per cent of the IT market. "We conservatively expect our internal growth to at least match the industry growth rate of 15 to 20 per cent annually," she said. "Major outsourcing contracts and acquisitions can significantly augment this growth. Earnings should exceed revenue growth as we gradually increase net profit margins:' CGI shares closed the week [of May 15] at a 52week high of $49ú25. They show a 12-month return of 775.5 per cent. Investors at the Montreal presentation evidently liked what they heard. CGI shares jumped 8.5 per cent in the days after Ms. Dore's presentation. Two other companies at the Montreal conference were Informission Group Inc. (IFN/TSE) of Quebec City, and LGS Group Inc. of Montreal. Informission Group is a junior company that has just opened an office in Ottawa. The company went public in April with an offering of 3.3 million shares at $l0.25. The shares rose to a high of $41ú50 [sic, it was actually $14.50, not $41.50!] soon after launch, but have since settled back at around $13 [note: closed at $14 on May 22]. Informission's focus is Year 2000 conversion, euro-currency conversions and intranet/Internet engineering. It has a long list of clients in the manufacturing, telecommunications, banking and insurance industries. LGS Group has 3 offices in Canada and two in France. It concentrates on Year 2000 conversions. In fiscal 1997, ending Mar. 31, it had revenue of $92.1 million and net earnings of $381,000. That compares with $83ú4 million and $2 million, respectively in fiscal '96. LGS shares reached a 52-week high of $20.40 in March, but fell to $15.60 earlier this month, a pullback of 23ú5 per cent. The company has 70 contracts in hand including a $25 million, three-year contract with the Department of National Defence, and a three-year contract with Agriculture Canada that the company estimates is worth between $5 million and $15 million.