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

To: JDN who wrote (18794)	6/19/1998 10:37:00 AM
From: Rick Bullotta	Read Replies (2) \| Respond to of 31646

One other way to look at it is that of the 515 employees you projected in July, 28% are non-technical. That seems to reaffirm the reasonableness of the 25-26% SG&A range... Your billing rates might also be slightly overestimated. $100 per hour for the core work is high, as there are lots of competitors, plus most of this work is fixed price, not T&M, so there is no allowance for overruns (look at some of the litigation TAVA and its sub-companies have had over the past few years on big overruns...). There is also a flood of entrants into the Y2K audit and inventory field, mostly local integrators, in the $100-$110 range. I'm aware of at least two major manufacturers where this rate differential has cost TAVA business (interestingly, they did get a small piece of business at each account, but not the "big score"). I also expect that the lion's share of large-scope remediation work will be competitively bid and will be executed more at the core business rates. Don't get me wrong, I think TAVA's numbers, relatively to their peers, will be EXCELLENT in 1999 and beyond, but I'm once again worried that expectations will be set too high, leading to the inevitable earnings disappointment and tumble in the share price. I think the last thing I'd be doing if I was a TAVA long is trying to get analyst numbers up much higher than they already are...you wouldn't be a short in sheep's clothing, would you? <just kidding, of course>