Tag - It

Much like a fine wine, Stanley, Inc.’s (NYSE:SXE) results are purported to become better with age. Bolstered by a rock-solid backlog, a synergistic acquisition and continued organic growth, the provider of IT services to U.S. defense and federal civilian government agencies has a strong outlook.

Stanley’s backlog is robust with 90% of forecasted revenues already in the books. Continued support for the Space and Naval Warfare Systems Center in Charleston, S.C. is one of the company’s latest and largest contracts that could translate to $249.88 million in proceeds should options and terms materialize.

Aside from organic growth, Stanley acquired Oberon Associates in June for $170 million. The company, which provides engineering, operational intelligence and IT services, expands Stanley's customer base to include the U.S. Army, U.S. Air Force, Defense Information Systems Agency, and several other agencies throughout the intelligence community.

Wachovia analyst Edward Caso expects the Oberon acquisition to add $0.01 to $0.02 to earnings in 2009 and purports the acquisition will be more accretive in 2010, as it adds higher margin intelligence capabilities to Stanley’s service offerings. “Stanley continues to be the fastest (organically) growing government services provider by far,” Caso wrote in a research note on August 1. “We believe estimates will continue to drift upward as the company rationalizes the competitive synergies . . .

Agilysys, Inc. (Nasdaq:AGYS) CEO Arthur Rhein said the information technology services provider’s recent acquisitions have given the Boca Raton, Fla.-based company a “much wider and deeper footprint” in the hospitality market. Rhein made the comments during a midday conference call.

“We still have a lot of work to do to meet our goals,” Rhein said. “For now though, given the current economic environment, we’ll be concentrating on running the business more efficiently and effectively and will only entertain additional acquisitions that have an important strategic fit.”

Agilysys said early Monday that it expects fiscal 2009 sales to range from $860 million to $900 million, which is below the $1 billion forecasted by Wall Street analysts. The firm also said it expects per-share earnings from continuing operations of between $0.05 and $0.35 for 2009. The earnings guidance is also below Wall Street’s expectation of earning $0.55 per share.

“The wide range in our guidance reflects the current uncertainty around the macroeconomic environment and we will revise our guidance as the year unfolds and corporate IT spending becomes clearer,” CFO Martin Ellis said.

Agilysys announced before Monday’s that it swung to a fourth-quarter loss of $0.8 million, or $0.03 per share, versus Wall Street’s expectation of breakeven earnings. During the year-ago quarter, Agilysys posted a profit of $200.6 million, or $6.46 per share. The year-earlier results included a $195.7 million gain on the disposal of a discontinued unit.

“In the fourth quarter, similar to many companies in our industry, we saw increased competitiveness coupled with an unusual and frankly surprising slowdown at the end of March, which is a critical and typically very busy time for us,” Rhein said. “The end-of-quarter weakness saw a number of major customers delaying purchasing . . .

The amount of data that corporations must store, back up and protect from prying eyes these days is growing like federal deficits in the midst of a recession. Data storage needs are currently expanding by some 60% annually (although decreasing prices and increasing efficiencies mean costs rise at a fraction of that rate). That provides significant opportunity for companies such as Datalink Corp. (Nasdaq:DTLK), a tightly-run small cap that designs, installs and services customized storage systems that keep corporations running.

Datalink, based in Chanhassen, Minn., is one of the few IT companies enjoying a strong run in a weak market. It beat Wall Street estimates in the last two quarters, and guidance for the coming quarter is strong. In the first quarter this year, reported on April 16, revenue was up 17% to $47.7 million, a record increase for a first quarter, which tends to be a weak one. Net income was $769,000, compared with a $153,000 loss a year ago, and at $0.06 per share beat Street estimates by a penny. Its gross margin of 26.5% was the highest since the fourth quarter of 2004, its backlog of $30 million was only slightly off the previous quarter's record $31 million, and the company's second-quarter guidance is for EPS between $0.07 and $0.11 on revenue of $48 million to $52 million — and this is a company that tends to hit the high end of its guidance. Datalink's current growth rate is about twice that of the overall industry rate of about 6%.

But Datalink doesn't seem to be getting much love from investors. At Tuesday’s closing, the stock was at $4.85, well below its 52-week high of $7.17, reached last June as it was suffering through its second consecutive quarter of losses. The stock has barely rebounded from its 52-week low of $3.54 just before earnings were announced. Its market cap is $61 million.

In his April 17 report, analyst Clinton Morrison with Feltl & Co. wrote: "We have a hard time understanding why DTLK should be trading close to the bottom of a two-year range." Morrison rates DTLK a "strong buy" with a target price of $7, based on . . .

AsiaInfo Holdings, Inc. (Nasdaq:ASIA)
Beijing, China
http://www.asiainfo.com

52-week low / high: $5.77 / $13.42
Shares outstanding: $45.15 million
Market capitalization: $582 million

With the Web’s far-reaching tendrils encompassing the globe, the probability of sensitive information being exposed to third parties is high. (Mostly) no one likes a voyeur, especially Chinese businesses. When times are compromised, AsiaInfo Holdings, Inc. (Nasdaq:ASIA) — a provider of IT security products and services and telecom software solutions to businesses big and small in China — is there to satisfy security needs.

Initially organized as a Delaware corporation in 1993, AsiaInfo moved major operations to China in 1995 and played an important role in the construction of the provincial access networks for China's national telecom carriers through its telecommunications business. Its acquisition of Lenovo’s IT services business in 2004, though, established it as a prominent supplier of all things IT security.

Today the company's operations are organized into AsiaInfo Technologies, which encompasses its telecommunications business, and Lenovo-AsiaInfo, which covers their IT unit. During the year ended Dec. 31, 2007, about 86% of the company's total revenue was from AsiaInfo Technologies, while the remaining revenue was from Lenovo-AsiaInfo.

AsiaInfo’s surfeit of solutions includes various software product suites, each given the name “Open” because the software is designed with open architecture for further development and customization for express functions. AsiaInfo usually combines its products together with its services to create customized solutions for individual customer needs.

In regards to demand for its products, the numbers tell the story. On Feb. 14, AsiaInfo reported results for the fourth quarter ended Dec. 31, 2007. Total revenue for the quarter was $40.8 million, an increase of 27% compared with the fourth quarter of 2006, and up 26% when compared to the third quarter of 2007. Net income was $8.46 million, or $0.18 per share, compared with $2.12 million, or $0.05 per share, in the year-ago quarter. Net revenue for the fourth quarter of 2007 was $35.1 million, an increase of 38% year-over-year, and 19% sequentially.

Not too shabby, considering AsiaInfo is firmly holding its own against the big boys of the telecom and IT security industry, including Amdocs Limited ($6.43 billion market cap), Shenyang Neusoft Company Limited ($16.18 billion market cap) and Cisco Systems, Inc. ($144.73 billion market cap).

AsiaInfo also comes to investors with a patina of bullish sentiment from analysts. On March 4, Kaufman Bros. said it believes the company has solidified its position as a leading provider of software to Chinese telecom companies. Coverage was initiated by the firm with a "buy" rating and $15 price target. Two days later on March 7, Roth Capital followed suit, beginning coverage of AsiaInfo with a "buy."

What better way to secure your assets than with a company whose trade is security?

Note: AsiaInfo Holdings, Inc. (Nasdaq:ASIA) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, AsiaInfo displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.

The information technology sector is coming of age in China, growing leaps and bounds as the nation's low costs and huge markets help make the Middle Kingdom an important hub for IT services.

One standout in the industry is AsiaInfo Holdings, Inc. (Nasdaq:ASIA), a top provider of telecommunications software solutions and IT security products and services in mainland China. AsiaInfo was founded in the United States in 1993, and moved most of its operations to China in 1995. The company operates in two divisions: AsiaInfo Technologies and Lenovo-AsiaInfo.

AsiaInfo Technologies provides software and IT solutions to all of China's national telecommunications carriers — including China Telecom Corporation Limited (NYSE:CHA), China Unicom Limited (NYSE:CHU), China Netcom Group Corp. (NYSE:CN) and China Mobile Ltd. (NYSE:CHL), the world's largest mobile operator. The company designs and provides infrastructure applications that enable telecom operators and service providers to offer services like mobile email, entertainment, and e-commerce technology and short message service. Lenovo-AsiaInfo focuses on providing information technology security products and services primarily to small and medium-sized businesses. The Lenovo segment's offerings focus mainly on firewall, remotely operated virtual private network technologies and denial of service protection.

In the last quarter of 2007, AsiaInfo inked several major agreements with China's telecom giants. The firm signed contracts to develop a customer relations management (CRM) system for Xinjiang Telecom, a provincial subsidiary of China Telecom; develop a mobile e-commerce platform for CMPak, a subsidiary of China Mobile in Pakistan; upgrade the business intelligence (BI) systems for China . . .

Yucheng Technologies Ltd. (Nasdaq: YTEC), a Chinese IT services provider to the local banking industry, reported fourth-quarter results significantly higher than Wall Street was forecasting and issued new guidance for fiscal 2008 above the consensus estimate.

For the three months ended Dec. 31, 2007, the small cap recorded net income of $4.3 million, or $0.26 per share, above the Thomson Financial mean earnings estimate of $0.18 per share. The current quarter’s bottom line compares with net income of $2.3 million, or $0.27 per share, for the same quarter last year. The net income number excludes amortization expenses of intangible assets of $0.31 million related to the firm’s acquisition of e-Channels.

Revenue totaled $23.5 million, an increase of 89% over the $12.4 million for the same period last year. Susquehanna Financial analyst James Friedman was forecasting revenue of $16.4 million for the quarter.

IT solutions and services revenue for the fourth quarter grew 193% from the same period in 2006, mainly driven by increased sales from product lines in Yucheng’s on-line banking, call center, risk management and core banking businesses.

“The company continues to enjoy the secular demand by Chinese banks for basic technologies, including ATM, online banking, and point of sale credit card processing,” Friedman wrote in a research note today.  The analyst reiterated his “Positive” rating on the stock today.

Shares of Avocent Corp. (Nasdaq: AVCT) have dropped to a new 52-week low on news before the start of trading that the maker of software and IT technology announced preliminary fourth-quarter revenue that disappointed Wall Street.

The Huntsville, Ala.-based company reported that it expects fourth-quarter revenue to be between $155 million and $157 million, which is well below the $173.72 million projected by 11 analysts polled by Thomson Financial. During the fourth quarter of 2006 the company brought in $164.9 million.

Chairman and CEO John Cooper explained that Avocent was negatively affected by several deferred orders and lower IT investment activity among some U.S. customers, including those in the financial services industry.

“We believe some customers delayed projects as they are taking additional time to contemplate industry developments and to assess macroeconomic factors,” said Cooper in a statement. “These factors were not apparent in our international sales where we experienced solid growth in Europe and Asia.”

“This is probably industry-wide; Avocent is not the only one affected,” said Eric Kainer, an analyst with investment bank ThinkEquity Partners, in a phone interview. “Anyone who has broad exposure to the financial industry is being impacted.”

Avocent reported that it is working with U.S. distributors to reduce the level of inventories held by them at the end of the fourth quarter.

As for the company’s growing international business, Kainer does not see how that segment can offset weakness in the North American markets.

“It’s a lot to make up for,” said Kainer, who currently has a “buy” rating on Avocent’s stock. “I don’t see any way in which it could fully make up for it.”

Final results for the fourth quarter ended Dec. 31 will be released on Jan. 24.

At 1:11 p.m. ET shares of Avocent Corp. (AVCT) had retreated $3.68, or 18%, to $16.53. The previous 52-week low of $20.04 was established on Jan 4, while the 52-week high of $35.64 was reached on Feb 2, 2007.

Since the Chinese government relaxed restrictions and allowed foreign financial institutions to enter China's retail banking market in December 2006, a world of opportunities have opened up for banks, both international and domestic.

China's increasingly liberalized financial services sector has attracted investment from global powerhouses such as Bank of America Corporation (NYSE: BOA), Citigroup Inc. (NYSE: C), HSBC Holdings (NYSE: HBC), Royal Bank of Scotland Group (NYSE: RBS) and Standard Chartered PLC (LON: STAN) — some have set up shop under their own banners, while others have purchased stakes in successful Chinese banks.

Stepped up competition from international banking rivals in a fast-growing market has left Chinese banks with no choice but to upgrade. Home-grown banks are now expanding their financial offerings and beefing up their IT infrastructure to keep up with highly-experienced foreign competitors vying for a piece of the more than $4 trillion in deposits held in China (and the growing demand for bank accounts, credit cards, mortgages and wealth management services among more affluent Chinese consumers).

One company that sees its future fortunes in the Chinese banking industry is Yucheng Technologies Limited (Nasdaq: YTEC), a leading information technology and outsourcing solutions provider. Yucheng provides services including IT consulting, system integration, financial software development, telephone and Internet banking, call center installation and support and risk management solutions to some of the largest banks, insurance companies and securities firms in China.

Yucheng Technologies Ltd. (Nasdaq: YTEC), a local IT and outsourced service provider to the Chinese banking industry, this morning said it sealed major contract wins with the Bank of Shanghai to provide follow-on ancillary solutions to its online banking system, which Yucheng previously built.

Yucheng began working with Bank of Shanghai in 2004 by building its online banking system. Under the current contract, the small cap will further integrate and upgrade the bank's channel management systems in an effort to improve the bank’s customer service.

Shares of Yucheng Technologies (YTEC) were halted in pre-market trading.

IT services company Computer Sciences Corp. (NYSE: CSC), said this morning that it will acquire First Consulting Group, Inc. (Nasdaq: FCGI) in an all-cash transaction for $13 per share, or approximately $365 million in aggregate.

“CSC is at the forefront of the global IT services industry and a very strong player in the health-care IT space, and adding FCG's deep health-care and life sciences domain knowledge and history to the CSC family makes for a compelling combination,” First Consulting Group’s CEO, Larry Ferguson, said in a press release.

First Consulting Group provides information technology services and products to health delivery, health plan and life sciences organizations.

Shares of First Consulting Group (FCGI) bolted 27.25%, or $2.72, to $12.70 at 10:49 a.m. ET. Shares of First Consulting Group have been trading in the range of $8.24 to $14.45 for the past 52 weeks. 

BluePhoenix Solutions, Ltd. (Nasdaq: BPHX) shares are up after the information technology company reported third-quarter revenue of $22.95 million, above analyst estimates of $21.87 million and up 34% from $17.11 million a year earlier.

“BluePhoenix is pleased to report great performance for the eleventh consecutive quarter, which reflects the ongoing adoption of our modernization solutions in the growing market," CEO Arik Kilman said in a statement. “Our solutions continue to achieve broad market acceptance both amongst our customers as well as with our partners including market leaders such as Microsoft, Oracle, IBM and Sun.”

The Israel-based firm’s quarterly profit declined to $0.74 million, or $0.04 per share, below analyst expectations of $0.17 per share and compared with $1.24 million, or $0.09 per share, during the same period of 2006. BluePhoenix’ income was impacted by restructuring, acquisition-related and integration charges, amortization and capitalization of intangible assets, the effect of stock-based compensation and non-cash financial expenses.

The company’s gross profit rose 34% to $13.22 million, from $9.86 million a year earlier. BluePhoenix’ selling, general and administrative expenses rose 64% to $9.07 million, from $5.53 million.

In midday trading, BPHX shares are up 15.15%, or $2.88, at $21.89. Over the last 52 weeks, shares have ranged from $5.26 to $21.99.

Yucheng Technologies Limited (Nasdaq: YTEC), a local IT and outsourced service provider to the Chinese banking industry, said this morning that it secured three risk management contract wins with the Agricultural Bank of China, Bank of Beijing, Huishang Bank and Guangdong Development Bank.

Under the contracts, which in aggregate are valued at approximately $1 million, Yucheng will provide services including project management, consulting, software implementation, and on-going support and staff training. The contracts will cover the areas of fund transfer pricing, asset and liability management and cost allocation analysis.

Yucheng said it was awarded these contracts in conjunction with leading global software vendors in the financial services industry.

Shares of Yucheng (YTEC) jumped 10.82, or $1.44, to $14.75 in pre-market trading. Shares of Yucheng have been trading in the range of $6.47 to $13.40 since it’s been public.

At a time when technology has become an essential component to just about any kind of business, it’s easy to overlook the fact that maintaining a network of computers can be a business in itself, and a pretty complicated one at that.

For those well versed in the multi-billion-dollar IT outsourcing industry, it might also be hard to understand how some small-cap companies can compete against the global players.

There is a thriving industry that outsources IT products and services, managing other companies’ computer networks and helping them install and maintain newer technologies so that they can devote more energy to their primary operations. But as more of this work has moved overseas, it’s become increasingly difficult for the little local guys to stay in business.

But a handful of small-cap companies are, in fact, holding their own in the IT outsourcing business. What’s perhaps most interesting about these companies is that, although their total revenues are modest, large chunks of their business often come from major companies or organizations.

Among the small-caps with that have had varying degrees of success in this space: Zanett Inc. (Nasdaq: Zane), Pomeroy IT Solutions Inc. (Nasdaq: PMRY), and Bell Industries Inc. (AMEX: BI). 

“Enterprise information technology” is one of those vague, but very widespread IT buzzphrases used to describe a wide range of software and hardware products, ranging from those that help companies manage large volumes of data to those that help companies manage their own technology.

The one theme that connects all these technologies is that the typical company – much like the typical American household – has growing amounts of “stuff” under its roof. Whether it be computer servers, layers of software being added haphazardly to maintain the servers, or volumes of consumer data that rest on these servers, all of this stuff needs to be organized in a somewhat orderly way so that it can be used to maximum efficiency, and, in the case of consumer data, stored in such a way that it may be easily called up on demand.

A couple of trends are driving this demand for technologies to better manage the enterprise and the data that rest within. The first, quite simply, is growth. As companies get bigger, they accumulate more computers to run their operations, and more consumer data to store.

Perhaps a more significant factor than sheer growth, however, is the haphazard way in which companies have typically grown their back offices: adding servers one, or a few at a time as required, and then patching them together with software and middleware, rarely taking the time to take a systematic look to determine how it might all be put together more effectively.