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

To: Rick Bullotta who wrote (17813)	5/29/1998 3:56:00 PM
From: Rick Bullotta	Read Replies (1) \| Respond to of 31646

For the record, my $0.02 on what I really think of the TAVA opportunity and why I'm frustrated not so much by the company (though there's some responsibility there), but more by the difficult expectations that have been placed upon them by others...it is extracted from a private e-mail I sent one of our illustrious colleagues...and hopefully will be illuminating to those who only think of TAVA as a Y2K company... ============== I think that much of the hype that was built up around this stock was not driven by TAVA itself, but by investors who truly don't understand what business TAVA is in. TAVA is so much more than a "one-trick pony" tied to the Y2K wagon...in fact, this is merely a transient opportunity they are exploiting on the way to becoming a major systems integration services provider. The growth in the SI services market is expected to outpace growth in most industries by a very large margin over the next few years, and I genuinely believe that TAVA is uniquely positioned to take a big piece of the pie. In the space TAVA plays, industrial automation & plant floor information systems, there is a rule of thumb that for every dollar of software sold, 5-10 dollars of service revenues are generated. For example, Wonderware alone generated nearly $500 million in service revenues for other companies in 1997. And they were only a small fraction of a very big industry segment, of which I believe TAVA could compete for $3-4 billion. I would be astonished if TAVA couldn't easily grow to 700-1000 people at a revenue run rate of $125-175 million within a couple years (at just under $0.90-$1.00 annualized EPS), and continued 15-20% growth via consolidation and acquisition. In this space, there are two classes of service providers. The very large on one end, such as the major engineering firms (Raytheon, Lockwood Greene, and so on) and the large consultancies (Andersen, E&Y, D&T, etc). And the very small on the other, typically mom-and-pop systems integrators of 5-30 people. TAVA is unique positioned because of its size and geographic coverage to carve out a big, big piece of this pie. And I believe that the exposure to large clients they'll gain as a result of their Y2K initiative will be an incredible asset in closing project and consulting business "after the millenium" (and before! - it already is!). TAVA can also move itself into the "sweet spot" of systems integration between the plant floor systems and the enterprise systems if it wants to. I've been indirectly advising them on how to move in this area. The rate structure is actually consistent with Y2K auditing (and a hell of lot more interesting!). There are no sure things, as we all know well, but if TAVA can focus on its core business with Y2K being a "booster rocket" to get them past escape velocity, they can be a viable, highly profitable service provider for a long time to come and can return excellent earnings and shareholder results.