Monday, January 8, 2007

Last week was good for GTSI Corp., which on Wednesday won a $42 million Justice Department contract and formally regained compliance with the Nasdaq Stock Market.

The Chantilly-based information-technology company, which has a market capitalization of $84 million, was delisted by Nasdaq last year when it had to restate — and thus failed to file on time — annual reports for 2003, 2004 and 2005, as well as a quarterly results for last year’s first, second and third quarters.

“The company is really rebounding nicely,” said Scott W. Friedlander, executive vice president of sales.

GTSI’s problems started in the summer of 2005, when it had trouble implementing a new enterprise resource planning system. From there, things snowballed — some government customers became uneasy, share prices fell, financial results had to be restated and voluntary employee turnover reached 54 percent in the first quarter of 2006.

“In any type of customer-facing environment, when you get a little bit of noise, customers certainly question that, and unfortunately, employees question it, too,” Mr. Friedlander said.

But now, with a new executive team and a strategic plan under way, the company has experienced a turnaround evidenced by several contract wins in the past few months, he noted.

The Department of Justice last week awarded GTSI a three-year blanket-purchase agreement worth $42 million. Under the deal, the company will deliver workstation, desktop and laptop products.

The Justice contract follows a December award of $63 million to supply the Federal Aviation Administration with information-technology equipment and the successful creation of a $15 million support system for the U.S. Navy Cyber Defense Operations Command.

“In total, fortunately, we announced over $115 million in wins on three contracts,” Mr. Friedlander said. Under the leadership of its new president and chief executive officer, Jim Leto, GTSI has reduced employee turnover fivefold and brought back many employees who left, he added. The company now has about 730 employees.

In its third-quarter results announced on Dec. 22, GTSI reported a net loss of $3.4 million (35 cents per diluted share), compared with a net income a year before of $2.96 million (31 cents). The company said it had a backlog of more than $290 million in contracts.

GTSI noted that its professional-services segment contributed more than 7 percent of revenues, compared with about 2 percent the year before. While the company said it has no plans to abandon its long-standing hardware business, it expects to generate better profits by focusing on enterprise products and professional services.

Mr. Friedlander said GTSI is “not your traditional systems integrator” because it is comfortable working in either a primary or subcontractor role. In addition, he said, the company holds more than 1,000 certifications with top hardware and software partners, giving it a wealth of “deep-dive” engineering talent.

Shares of GTSI have fluctuated between $4.86 and $10.22 in the last year. The one Wall Street analyst who follows the company, Brian Kinstlinger of Sidoti and Company, has a “buy” rating, according to Bloomberg News.

Yesterday, the stock closed up 4 cents at $8.86.

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