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GIS WORLD STOCK WATCH
GIS hardware firms make up one of three groups of companies comprising the GIS WORLD Stock Index. Hardware is an amalgamation of products, running the gamut from computers and workstations-usually the largest GIS expenditures-to peripherals such as printers, plotters, modems, networks, monitors, digitizers, and semiconductors.
This month’s "Stock Watch" column emphasizes larger companies such as IBM, Hewlett Packard (HP), Digital Equipment Corp. and Unisys. Personal computer makers such as Apple, Compaq, Dell and Gateway also are considered, as well as workstation manufacturers such as Sun Microsystems and Silicon Graphics.
Some of these companies also make other hardware components, such as printers at HP. Also specializing in printers, Tektronix produces high-end color products, often used in GIS applications. Symmetricom, one of the smallest firms selected, concentrates on synchronization products that use Global Positioning System (GPS) technology for applications such as telecommunications.
Only two hardware firms comprise the index, as most other hardware firms are large and obtain only a small part of their revenues from GIS. Trimble Navigation, a leading GPS company, already is part of the index, while Intergraph Corp., a diversified index firm, makes GIS workstations. The table below summarizes hardware companies. The market capitalization (caps) for such firms as HP, Sun, Compaq and Digital all exceed $10 billion. Not surprisingly, IBM is the largest, with HP not far behind.
Besides Symmetricom, the companies with the smallest caps are the index firms. IBM is tops in any measure of size, such as revenues or employees, firms such as Intergraph, Digital and Unisys have relatively low market caps. Those firms’ profit margins are the lowest, as are their estimated growth prospects. But, their price-to-earning rations (PEs) are among the highest.
While the market expects better prospects for those companies, at the same time, the PEs of several firms appear remarkably low in light of their possible growth prospects. They include Gateway, Silicon Graphics and, especially, Dell and Symmetricom. There’s some expectation that the economic cycle will slow hardware demands. But if high growth firms with low PEs perform well, look for prices to rise.
GIS WORLD Index Outperforms Standard & Poors
Nearly as many index stocks rose as declined, with most doing one or the other in a double-digit fashion. The net effect was an 8 percent index gain in January 1996, compared with Standard & Poors 500’s 3 percent. The two biggest movers were MapInfo, setting a new low with a dramatic 36 percent drop, and Analytical Surveys, setting a new high with a stellar 40 percent gain.
Primark also is setting new highs, and Intergraph is as high as it’s been in years. Conversely, Autodesk Inc., Eagle Point Software and Trimble are at their lowest points in some time. Thus, the trends of the index stocks are at performance extremes. An improved index performance, therefore, depends on the bad doing better and the good staying good.
GIS WORLD Inc., April, 1996; pp 86.
(This article was reproduced with permission from GIS WORLD Inc.)