Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Josef Svejk who wrote (13308)	11/20/1998 8:21:00 AM
From: bob	Read Replies (1) \| Respond to of 13949

Dow Jones Newswires Cognicase Expects 25% To 30% Rev Growth Fiscal 1999 By SCOTT ADAMS Dow Jones Newswires TORONTO -- Cognicase Inc. (COGIF) is expecting revenue growth of 25% to 30% for fiscal 1999, and that growth won't be driven by Year 2000 business. Earlier Thursday, the Montreal-based information technology services company reported results for its fourth quarter ended Sept. 30. which were in line with analysts' expectations. Cognicase reported net income of 20 cents a share, not including foreign exchange gains, which matched the First Call mean estimate of three analysts. Revenue for the quarter was $24.7 million. In the year, Cognicase earned 56 cents a share, not including foreign exchange gains, on revenue of $59.1 million. In the fourth quarter, some 20% of Cognicase's business came from solving Year 2000 computer problems. In an interview Thursday, Cognicase chief financial officer Marc Lamy said the company expects revenue from that area will stay flat in fiscal 1999, while revenue from other areas is expected to increase by 30% to 40%. Cognicase Inc. (COGIF) has made seven acquisitions in the past year and is expecting 25% to 30% revenue growth as if it had owned all of those business for the past year. This means that Cognicase chief financial officer Marc Lamy is "comfortable" with analysts' revenue estimates of about $130 million to $132 million for fiscal 1999. For fiscal 1998, Cognicase's Year 2000 business accounted for about 35% of business, Lamy said. But the acquisitions over the past year have given Cognicase a more diversified revenue base so that the company can continue to grow once Year 2000 problems are fixed, he said. On a run rate, Year 2000 business only accounts for about 19% of revenue, Lamy said. "Obviously it was a key strategic move for the company to bring Y2K to within (a reasonable percentage of business) so that it doesn't become a problem for investors or our own stability," Lamy said. Perhaps a year ago, investors were expecting big surges in revenues for information technology services companies leading up to 2000. But those expectations were too high, Lamy said. While some thought Year 2000 service fees would double and quadruple as 2000 approached, the business has remained competitive, Lamy said. The company has slowed down its acquisition pace because its last one, of Nat Systems International, was fairly large and in Europe, Lamy said. But he expects the acquisition pace to pick up again in fiscal 1999. Cognicase closed the purchase of Nat Systems on Sept. 1, so the fourth quarter didn't include full results from that acquisition. Geographically, about 30% of revenues come from Europe, 15% from the U.S., 5% from other areas such as Australia and 50% from Canada. Lamy would like to see Europe grow to 50% of revenues, with revenues from North America making up the rest. Lamy said the company would like to expand its presence in Western Canada and expand in the consulting business in Europe. In North America, it would also like to buy a software sales channel, just as it did with the purchase of Nat Systems in Europe. Rajiv Das, analyst with CIBC Wood Gundy Securities Inc., said the fourth quarter was in line with his expectations. He is expects Cognicase Inc. (COGIF) to earn $1 a diluted share in fiscal 1999 on revenue of $132 million. The biggest concern about Cognicase is whether it will be able to maintain growth and profitably integrate all the acquisitions it has made in the past year, Das said. "I think the company is on track for delivering the results it has targeted for itself," Das said. While the company isn't dependent on Year 2000 business for growth, it is poised to handle any unexpected or urgent volume of Year 2000 business should it emerge, he added. In the fourth quarter, Cognicase's accounts receivable were high at $27.7 million. But Cognicase's Marc Lamy said that was because of the company's acquisition of Nat Systems. All of Nat Systems' receivables were included in the quarter, but only one month of revenues, as the acquisition closed Sept. 1. He expects the company's receivables to return to normal levels in the next quarter. -By Scott Adams; 416-943-7804; scott.adams@dowjones.ca