Solutions providers' stock prices took two steps forward and one back last week despite strong earnings from Agilysys and MPS.Publicly held solutions providers continue to post strong earnings, but investors have taken a breather as the bull market heads into its 17th month.
For the week ended Jan. 30, our Ziff Davis Channel Zone Stock Index dipped 0.38 percent to 1178.83. Decliners outnumbered advancers 15 to 14, with one index member unchanged.
No news was good news for Manchester Technologies Inc. (MANC). Shares in the Hauppauge, N.Y.-based solutions provider rallied nearly 25 percent during the week. The rally occurred without any major announcements from Manchester, though the company's thinly traded stock has been susceptible to dramatics swings higher—and lower. Manchester did not return requests for comment about its stock price. The company is expected to announce 2Q results on March 11, according to Earningswhispers.com.
Meanwhile, Agilysys Inc. (AGYS) and MPS Group Inc. (MPS) both delivered strong quarterly results last week. For its quarter ended Dec. 31, Agilysys' year-over- year revenue climbed 22 percent to $376.4 million. Moreover, year-over-year operating income skyrocketed 153 percent to $20.2 million and net income quadrupled to $8.7 million (compared to $1.9 million for the corresponding quarter in the previous year).
Next page: MPS, Sapient, Acxiom
Page 2: MPS, Sapient, Acxiom
You can trace much of Agilysys' momentum to the September 2003 acquisition of Kyrus Corp., which contributed more than $20 million in revenue to Agilysys' top line during the quarter. Kyrus sells point-of-sale solutions to major retailers such as Starbucks Corp.
Despite the strong results, Agilysys isn't resting on its laurels. The company acquired Inter-American Data Inc. (IAD) for $36.5 million on Feb. 2. IAD specializes in software and services for hotel casinos and resorts.
MPS Group also announced healthy results for its quarter ended Dec. 31. Year-over-year quarterly revenue at the Jacksonville, Fla.-based consulting firm rose 4.2 percent. Strong demand for consulting expertise in Europe boosted Modis, the company's IT services division. "Demand is clearly improving faster in our professional businesses, and we anticipate that demand in our IT businesses will continue to improve," said CEO Timothy Payne in a prepared statement last week. "With an improving business environment, we are looking forward to a year of growth in 2004."
Another winner from last week, Sapient Corp. (SAPE, +5.98 percent), recently signed a contract to redesign Dutch energy specialist Essent N.V.'s IT infrastructure. The new system was built on Java and Oracle applications; Tibco middleware; and OpenLink's Endur energy trading software. Although terms of the deal weren't announced, Sapient shares rose nearly 6 percent during the week.
In another piece of upbeat news, solutions providers appear confident that their cash flow will continue to improve. Acxiom Corp. (ACXM), for one, declared its first-ever quarterly cash dividend (four cents per share payable on March 8 to shareholders of record as of the close of business on Feb. 14). According to Acxiom Chairman Charles D. Morgan, the company generated record quarterly operating cash flow ($79.3 million) during its most recent quarter. By March 8, some of that cash will find its way into investors' pockets.
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Page 3: Index performance: Week of Feb. 2, 2004
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About this Column: The Ziff Davis Channel Zone Stock Index tracks 30 channel-related stocks on a weekly basis. We don't recommend buys, sells or holds. Rather, the index seeks to measure the channel's financial health. We launched the index on Oct. 24, 2003 with a value of 1000. Each stock in the index is equally weighted. For example, if one stock rises 5 percent and another falls 4 percent, the net result is a 1 percent gain.
Joseph C. Panettieri has covered Silicon Valley since 1992. He is editorial director of the New York Institute of Technology . Write to him at joe_pan5@yahoo.com.
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