- The Washington Times - Thursday, August 31, 2000

Shares of GTSI Corp., a Chantilly, Va.-based computer reseller to the government, surged 50 percent yesterday after the company won a potentially lucrative contract with the Army.
The stock closed at $5.06 yesterday on Nasdaq, up from $3.38.
The two-year contract is valued at $75,000 and includes three one-year options. But if the company takes advantage of all of the available business being offered by the Army, it could earn as much as $857.2 million.
GTSI won the contract in conjunction with IBM, and both will supply computers and related equipment to the Army.
"Both IBM and GTSI will be performing the same function," said Army spokesman Maj. Bill Bigelow. "But there will be two different pots of money."
Only $75,000 is guaranteed.
Investors pushed the price of GTSI stock up after the markets closed Tuesday. The largest surge came during after-hours trading Tuesday, when shares of the company were selling as high as $10 and news of the contract was released.
Analysts said Tuesday's surge was the result of uninformed investors, who read early press releases. Those early releases did not indicate the full $857.2 million is not guaranteed.
Thomas Meagher, an analyst with BB&T; Capital Markets in Tysons Corner, Va., who follows the company, said investors probably believed GTSI was guaranteed almost a billion dollars.
"That's the farthest thing from the truth," Mr. Meagher said. "This contract is nothing more than a license to hunt."
Formerly known as Government Technology Services Inc., GTSI Corp. was founded in 1983 and was the first company to offer the government products off the Internet. Its revenues fell 8 percent to $136.6 million in the second quarter from $148.8 million a year earlier. Net income rose to $273,000 from $63,000 a year ago.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide