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Sapient Corp. Message Board

  • kkreme1 kkreme1 Jul 2, 2001 2:26 PM Flag

    Sapient's Numbers Game

    I hope Sapient is not fudging its numbers to clients the same way it is doing to its investors. No wonder these guys are in deep doo-doo, they can't do basic algebra! Here is the revised math.

    Mar 2, 2001: Sapient announces a 20% cut of 720 people.

    June 2, 2001: Sapient announces a 14% cut of 390 people.

    Based on these numbers Sapient had 3600/2880 people before/after the March cut and 2786/2396 people after the latest cut. Implies that about a 100 additional people were fired or left the company during these 3 months.

    That makes it an effective cut of 17% for the current cut and a total of 33.5% for this year.

    Now let's look at the 60 suckers being sent to India as per June 2 release. This is a common tactic among Indian companies to send their employees back to home base in India whenever they are on bench to reduce expenses. This must be a first for a US-based company to send its people back to India to reduce expenses. This is a good move for the company but a crappy option for the employees. Guess what happens if they refuse?

    Factoring in these 60 suckers, it is a 19% cut not the 14% they claim and a total cut of about 35% for this year!!!

    Assuming this brings them to the more manageable level of 75% utilization, we still got 600 people sitting on their hands! Expect another 20% cut over the next 3 months (of course, as per Sapient's interpretation it will be a 10-15% cut!)

    Fuzzy math, faulty logic, desperate smoke screens and busted company! If these guys are in the S&P 500, maybe my mom and pop's dime store can be too ... they never had a loss.

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    • This stock trades at a big premium to Diamond and Answer Think and others...

      Why the premium? The story here seems to be worse then at these firms yet the valuation is 50% higher in terms of Market cap.


    • You guys need to get off this "trading at blah blah times revenue" kick like it is the only indicator. Get a clue. Pretty much every "i-consultant" is trading at LEAST 1x revenue, if not 2 or 3 times it and still PLUMMETING.

      You better get a grip on sound financial analysis if this is how you play your game.


    • I don't hold this stock, but I still stand by what I have been saying all along: This dog is dead.

      Look for $5 very soon, and if no takeover is imminent at that point, I see this thing hitting $3 quickly after.

      You would think people would have learned in the last year not to risk money on garbage like this, but strangely, they haven't. If you are buying into this stock now you better stock up on the Rolaids.

      As for any analyst telling you to buy this junk, he either has some vested interest or some other line in on sape. You didn't have to see the expose of these analysts on TV this week to know 90% of them are crooks.

      Get out before you lose the rest of your money and don't be giving goofs like the guy who posted this original message your valuable. time.


    • the fact that this stock still trades at more than 1x revenues shows that investors are still optimistic on sape. I'm sure that future growth will show that they are wrong.

    • God forbid I get into a pissing contest... so I won't point out that you use 'i.e.' to explain an idea and 'e.g.' to give an example... no, I will stick to the wanna-be analyst garbage.

      So, you're suggesting that Sapient is going to be just like Tata, Wipro, or the others you mentioned? That's super. Maybe no one will notice that the others are all based in India or run by Indians? Maybe the fact that the others are profitable and Sapient isn't won't hurt them. By your reasoning, if Korean companies started doing well in this area, you'd just pack up SAPE's staff and send them to Korea? Then they'd be Korean too!

      Where I went to school, the professors would call you out if you started this "potentially improving IT spending patterns (on a relative basis)" trying-to-sound-analytical crap. 'Improving' is, by definition, relative, and you can say 'potentially' about any scenario. And you do. That brings us to unjustified statements.

      Exactly where do I find these "industry checks" that reveal such powerful facts like the one about the Big 5 consulting firms competing against and losing to these Indian consulting firms? Or that in "most cases" offshore consulting firms are gaining market share? You mentioned five. There are a lot more than that.

      Finally, you include in your "buy/strong buy" recommendation the idea that EPS will *worsen* through 2002 for Sapient?! I think you can include me in the crowd "concerned with valuation." You see, there was this Internet thing that happened, and valuations were dismissed, and then everyone, except you, learned that valuations are what stocks are all about. Explain to me why, were I to accept your faulty reasoning, I wouldn't wait until I felt that their valuation had bottomed before I bought in? Oh yeah, that's why you had to throw in the "acquisition" rumor again.

      All I can figure is that you either:
      a) were an analyst who got fired and now practice your deceptive, misleading voodoo on message boards, or
      b) you're holding a pile of SAPE bought at $70, or
      b) this is all an elaborate joke.

    • my first message on this board was 21/6/2001.sape was about 7,80-8$.
      all the pessemistics told at that time ,sell,sell,sell(always the same people,because some of them going short)and now after the bad news sape is still higher.
      i told before,i'm a long term invester and i hope all the people who are on this board now still will be here within 1-2 year and then we will make the bill.

    • today showed you that they`re right:-)

    • i agree with your couldn't say it better.there are so many people on this board who are pessimistic on sape and i'm sure the future will tell us they are wrong.

    • Last year, Sapient, the sector leader, made a surprise move towards the Indian offshore market and began gradually establishing its own base there.

      The importance of this decision �to go offshore� did not capture my attention until earlier this year (realizing the relative strength of the offshore sector, i.e. Cognizant Technology Solutions.) Industry checks suggest that in most cases, offshore-based vendors (Cognizant Technology Solutions, HCL Technologies, Infosys, Wipro, and Tata Consulting) are gradually gaining market share in the US given their strong pricing positions, quality execution capabilities and powerful R&D efforts.

      As in previous instances during its evolution, Sapient seems to have correctly anticipated/predicted this trend and as a result began to reposition its business model. Given the acceleration of this process (Fortune 100 clients becoming much
      more comfortable for offshore execution), expect Sapient to quicken the build-up of its offshore base in India. This process(recruiting, training, facility build-up), could impact the company�s profitability during the next few quarters. Accordingly, EPS estimates should decline slighlty for 2001 and 2002 (factoring in lower revenue growth and further pressure on gross margins.)

      Sapient is headed in the right direction. Investors caring mostly about improving sector trends would naturally want to own Sapient, the sector�s leader. Those that are concerned with valuation will find it difficult to chase Sapient�s stock at current levels (48.1X projected 2002 earnings; 2.4X projected 2002 revenues).

      I maintain a Buy/Strong Buy ahead of a potential rebound in IT spending late 2001 or early 2002, and given the Indian Media�s continued (albeit quite speculative) fascination with Sapient as an acquisition candidate.

      Despite the fact that Sapient�s management started this process in 2000, expect a significant acceleration in the company�s build-out efforts over the course of the next six to twelve months. It possible that the company could have 20%-25% of its billable headcount in India by year-end. A scenario such as this would help the company sustain its leading edge competitive presence in the small cap sector.

      The shift to incorporate more offshore development in its business model is an extremely important strategic move for Sapient as it evolves into a global systems integrator. This is especially true in the context of potentially improving IT spending patterns (on a relative basis) in 2002.

      While in the past, off-shore vendors were mostly associated with low-cost �body-shopping�, these days reality is completely different. Cognizant Technology Solutions, HCL Technologies, Infosys, Wipro, and Tata Consulting are competing effectively in the market for rapid deployment of mission critical systems (the typical US-based competitors include Sapient, Braun Consulting, C-Bridge Internet Solutions, Proxicom) and winning a fair amount of new business. In addition, all these vendors are gradually beginning to compete against the consulting arms of the mighty Big Five in areas of application management and large implementation efforts, also winning a fair amount of business.

    • Shut up. You are.

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