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

To: Mama Bear who wrote (18486)	6/16/1998 3:23:00 PM
From: gamesmistress	Read Replies (1) \| Respond to of 31646

According to Scott Liolios (TAVA's Investor Relations rep): 1)TAVA last met with Emerald Research, one of 2 investment firms covering TAVA, on June 8 for 3 hours. They are now rebuilding their model. (Mr. Pink apparently thinks this means a downgrade. Could mean an upgrade, or a reiteration of the original recommendation (Buy)) 2)The language and terms of the loan from Tandem/Sirrom is not unusual. (I don't know enough about this to comment.) 3) TAVA will continue its practice of putting out press releases about once a month or so. It does not want to "hype the stock", and the firms it met with during its road show last week are comfortable with this as well. (TAVA has always been VERY conservative in issuing press releases, BTW.) As for TAVA post-1/1/00, please read this post on the most recent update from Hanifen Imhoff, the other investment firm covering TAVA. Anyone who thinks y2K business will stop on January 1, 2000, BTW, needs to educate themselves a bit more on the problem. From: Wildman262 Wednesday, Jun 10 1998 11:31PM ET Hanifen updated their report on TAVA on 5/20/98. I don't know if this was already posted or not. I will post some of the highlights. I was told that these were conservative estimates. 1999E is $1.10 on 125million. The 125 is broken down: 90 y2k 12 hardware resale 23 services base "we have increased our level of confidence that he market for TAVA's y2k product is large." -company is instituting price increases of 10-25% for y2k tools and services. -y2k rollout slips about one qtr, thus lowering 4q98 and 1999 estimates from $1.25 to $1.15. -plans to increase it's tech. workforce by 30% in the next 90 days. -TAVA is laying the groundwork for INCREASED Growth in core business beyond year 2000. some things they are doing... 1) They have formed a consulting division headed up by Tom Bruhn who was the former Dir of Bus. Dev. for Raytheon's Auto System division. 2)They plan to increase by several million the amount of investment spending in 1999, 3)the recent linking of a y2k contract with follow on for future services 4) the evaluation of potential acquisitions Basically, Hanifen believes that risk with with TAVA is their ability to execute the stratagy. There is plenty of y2k business to be had.

To: Mama Bear who wrote (18486)	6/16/1998 3:49:00 PM
From: CMason	Read Replies (3) \| Respond to of 31646

Barb -- Although I usually post on stocks I'm short, I've had a (small) long position in TAVA since last Fall, and it has been quite profitable for me. While this is normally considered a Y2K stock, it's not a ZITL (which I'm short). TAVA has a real business in factory floor systems integration, but historically it's not been profitable for them. Y2K gives them the opportunity to increase their sales volume short-term, which should translate into some profitable quarters before 1/1/2000. My expectation is that they'll use the resulting profit and the relationships gained through Y2K to consolidate what remains a fragmented industry, so that they'll have a profitable business in systems integration after the 2000 hype is over. The historical financials are poor, but their announcement of over $12 million in Y2K bookings in May suggests that things will improve in the current quarter. Last year their AMJ quarter revenues were $9.5 million, resulting in a loss of $3.2 million (-$.34/share). If you assume their base revenue in Q2 resembles Q1 (not much seasonality in this business), and that conservatively half of the May Y2K bookings is incremental, this results in revenue of $17.7 million, an 86% gain over year-ago. If you use the first quarter gross margin rate of 44.3% (even though the Y2K business is probably more lucrative), that gives GM of $7.8 million. Subtract $4.5 million of SG&A (I assume it's mostly fixed), and you have a net profit of $3.3 million (roughly $.17/share), which I assume is tax-exempt due to prior-year carryforwards. If their actual results are in line with my "back of the envelope" estimates, they'll significantly exceed the analyst expectations, and I'd expect the stock to pop nicely. Annualize those figures and you get earnings of $.68/share, which implies a P/E of around 14 at the current price. That's pretty reasonable, and it doesn't take into account that both volume and margins are likely to increase as we get closer to December 1999. If we assumed that TAVA could bill $12 million of Y2K business every month, then earnings would probably be over $2.00/share, but we don't have to be that extreme to conclude that the stock is probably undervalued at its current price. Their balance sheet is in good shape, as well, with a 2.5:1 current ratio, $6 million in cash, and low debt relative to equity. Don't let me put words in your mouth, but I think the bear case is that a) the company has never made any significant money, b) Y2K is overhyped, and c) even if the company does make some money out of Y2K, it's a one-time event and the market will discount it accordingly. Of these, a) is certainly true, but the release of May orders suggests they've turned the corner. B is certainly true as far as it relates to the mainframe side of the business, but potential problems with embedded systems are just now coming to the forefront, and most major manufacturers and utilities are going to at least be concerned enough to do an audit. Keep in mind that the factory floor systems in many industries are truly mission-critical, unlike say databases or accounting programs, and publicity-hungry congressmen will keep banging the drum. The answer to C will depend on how successful TAVA is at Y2K and what strategic moves their management makes. The JFM conference call suggested they're acutely aware of this perception, and they're working hard to insure they have a future beyond Y2K. My guess is that we'll have a good AMJ earnings report, which hopefully will issue on a reasonably timely basis (June 30 is the company's fiscal year-end). That should move the stock, and momentum players and maybe a couple of institutions will jump on, moving it up further. That should get me to the 1-year holding period for capital gains, at which point I'll reassess whether to hang on for 18 months or bail. I needn't tell you to do your own due diligence, but I thank you for prompting me to review my reasons for holding the stock. Regards, CMason