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

To: Alastair McIntosh who wrote (20704)	7/15/1998 10:12:00 PM
From: Rick Bullotta	Read Replies (2) \| Respond to of 31646

Why TAVA will generate profits from their core business... There are no guarantees, but here are some reasons why I am confident they will: 1. They are finally completing the lengthy process of assimilating the various acquisitions (ACT, ACS, Vision, etc.) and will finally get some efficiencies and overhead/SG&A savings as a result. 2. By establishing long-term relationships with key corporate clients via their Y2K initiative, the cost of sales for future business could drop dramatically, which is a couple percent straight to the bottom line. 3. The simple economies of scale that go with 500 billable engineers moving forward, provided that they can avoid additional layers of management (which, so far, they have been able to do). 4. A (yet to be accomplished, but underway) shift from low-margin PLC work to high-margin enterprise integration work. If they can execute on the above, I would expect there to be a significant increase in profitability in their core business moving forward. Will these new profits be on the same level as Y2K profits? Almost certainly not. In fact, more like 1/2 of the margin they'll be able to achieve in the Y2K space (supply and demand!). But well above the norm for their industry. This is why I see TAVA being able to sustain a price approaching the $10 range long term, after a possible run into the high teens and low twenties amidst the heat of the Y2K frenzy. The wildcard would be someone such as GE or another major player acquiring TAVA. Despite the fact that profit margin will be higher than average for their industry, the sheer number of shares outstanding will hold the price in check over the long haul. "But that's just my opinion, I could be wrong".