- The Washington Times - Tuesday, February 12, 2008

Hotel and food service software company Micros Systems Inc. reported net income of $24.1 million for the second quarter, a 33.7 percent increase from the same period last year, beating analysts’ predictions for diminished growth due to a dwindling hospitality industry.

“We are very pleased with the financial results for the quarter,” said Tom Giannopoulos, Micros’ chairman, president and chief executive officer.

The Columbia, Md.-based company has made major strides over the past year while most other industries have declined, including restaurants and hotel services. They are Micros’ main customers.

Micros designs and manufactures software and hardware for the hospitality and specialty retail industries.

According to analysts, the company was able to increase its presence by excelling in an uncrowded marketplace.

“The worldwide food service and hotel systems markets, which are key target markets for the company, are substantial and underserved,” said Vincent Colicchio, an analyst at NobleFinancial. “Micros reported better-than-expected results because its strong competitive position enabled it to increase market share despite the weak economy.”

Most recently, the company said it closed a deal to deliver hardware and software to Burger King’s 775 corporate-owned stores and inked another deal with Omni Hotels to use Micros’ hotel reservation and property-management systems.

“Most impressive, during the quarter the company experienced strong growth across all of its vertical markets, which include the food service and hotel markets,” said Mr. Colicchio.

Second-quarter revenue rose to $244 million, up $54.1 million, or 28.5 percent, from the same quarter last year. Over the past nine years, sales have grown 12 percent.

Micros has posted stellar growth and analysts expect strong growth over the next five years, though at a lower rate. Profits over the past five years have grown at a 37 percent rate.

Its share price has appreciated nearly 60 fold since 1990. Along the way, Micros has graduated from a small-capitalization company to a mid-cap one, with a market capitalization of $2.8 billion.

The shares still seem reasonably priced, despite their appreciation. Their price-to-earnings-growth ratio based on five-year projected earnings growth is 1.33, a modest figure given Micros’ anticipated profit growth of nearly 19 percent per year. The stock trades at three times the company’s sales over the past year.

In comparison, BMC Software shares trade at 3.9 times sales and Microsoft’s trade at 4.6 times. Both are considered peers of Micros in the systems software industry.

Of course, owning Micros is more risky and volatile than owning Microsoft, which could explain the latter’s richer valuation.

Micros stock closed yesterday at $34.67, up 98 cents, or 2.91 percent. Its shares are up 9.3 percent this year.


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