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SEVI...Watch it!! may have finally hit bottom...starting to u/t now
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[QUOTE]Originally posted by Asklepidaurus: [QB] I spent the evening examining the details of the Systems Evolution/Datalogic agreement and it seems favorable to us. [URL=http://www.sec.gov/Archives/edgar/data/1083273/000102317507000032/0001023175-07-000032-index.htm]http://www.sec.gov/Archives/edgar/data/1083273/000102317507000032/0001023175-07- 000032-index.htm[/URL] First, we apparently have new management for the company, David Walters as CEO, which is usually energizing to both the company and the stock price. Second, SEVI has rather surprisingly negotiated a very beneficial arrangement. They have simultaneously shed the responsibility of managing their IT division and retained its value in the form of a 42.7% stake in a larger IT company that is similarly growing at a rapid pace via acquisitions and expansion: “Datalogic International, Inc” (DLGI). SEVI needed to greatly restructure its IT division or sell it off anyway because the division was not growing profits (even with increased revenue). This way, SEVI retains the time and money invested in the division as long as DLGI flourishes. Datalogic is an IT solutions company based in California, but with existing operations in Houston. They consult on projects for the IT sector and healthcare industry, as well as government contracts dealing with homeland security. With SEVI’s IT division, DLGI expands its base to Austin and San Antonio and gains a strong link to the State of Texas government. According to DLGI’s most recent 10K, the company is earning annual revenues of roughly $16 million, while SEVI’s IT division is making about $4 million. Hence, SEVI just acquired 43% of DLGI by offering them a 25% increase in their revenue. (Before the deal, the outstanding shares of DLGI stood at 54,447,626, and with the addition of SEVI’s IT division, should now be at 94,947,626). Here is some more info from DLGI’s website: http://www.dlgi.com/about_subsidiaries.html http://www.dlgi.com/about_clients.html http://www.datalogicconsulting.com/AboutUs/AboutUs.htm And from their recent 8K: “Our objective is to grow the core businesses through a combination of organic and acquired growth. . . . [Part of our strategy is to] acquire complementary businesses and technologies. We intend to build our revenue base and solutions by selectively acquiring complementary businesses and technologies. We target companies with the following characteristics: (1) an established market presence in their respective fields, (2) a loyal customer base that can be used to cross-sell other products and services, and (3) products and services that provide recurring, predictable service and maintenance revenue streams.” In contrast to the IT division, SEVI’s Next Hire permanent placement division grew its revenue 131% last year (according to SEVI’s 10K from 9/06). Next Hire is also the division that recently won a 3-year contract to staff all the engineering personnel for Petrobras Oil’s new U.S. installation. It appears to me that SEVI is going to continue as an independent company based around its rapidly growing Next Hire division, while retaining a large stake in the IT sector through its 43% ownership of Datalogic. Hence, my assessment is that this agreement fixes the shortcomings of SEVI. It allows the management to focus resources on growing Next Hire to its fullest potential while retaining the fruits of their labors in the IT sector. The 43% ownership in Datalogic (with additional profit-sharing during the first two years) is an extremely good deal for SEVI. I am frankly impressed. At this time, I continue to project a minimum share value of $0.01-0.02. However, the upper limit will likely need to be raised once we receive an update on Next Hire's revenue and a more recent 10K for DLGI. -Asklepidaurus [/QB][/QUOTE]
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