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

To: Karl Drobnic who wrote (20546)	7/14/1998 11:30:00 AM
From: Rick Bullotta	Read Replies (1) \| Respond to of 31646

Karl: I'm also aware of subcontracting requests being made to a number of local systems integrators. It is VERY important to note, however, that this changes the margin equation substantially. As one might expect, gross margin on the subcontracted work would probably be $30-40 per hour lower when subbed out. There is also the danger that the client relationship ultimately goes to the subcontractor, as this is still, at its roots, a people business. The heart of the question is, does this allude to a difficult in hiring or an overflow beyond their expectations? If the latter, then subcontracting out is great, because it is incremental revenue/profit beyond the original plan, and EPS numbers might go up. If the former, we need to understand what the obstacles are and must account for it in adjusting earnings estimates downwards. Perhaps this adds more fuel to the acquisition fire in terms of swallowing up a couple of smaller integration firms. Good news is that there are plenty of companies that would love to have the problem of too much work and not enough bodies! <g> "Need more information"...anyone ever try to convince TAVA of doing interim conference calls rather than waiting until earnings reports? Would seem a good idea given that there are only a couple more earnings announcements 'til Y2K!