GTSI reports FY '96 loss
- By Bob Brewin
- Mar 02, 1997
Government Technology Services Inc. reported a loss of $17.6 million for its 1996 fiscal year that company executives said was caused by one-time write-offs. Chief executive officer Dendy Young said the write-offs will allow the company to straighten up its balance sheet going into the new fiscal year. The biggest charge reflected a write-off of intangible assets and "good will" associated with GTSI's 1994 acquisition of Falcon Microsystems Inc.
The company also took a charge of $900 000 related to the settlement of a contract dispute with the Air Force over free software upgrades for Windows 95 on the Air Force's Desktop IV contract $2.7 million in uncollected vendor receivables and another $1 million for excess office space.
Young took command of GTSI the largest player in the General Services Administration's PC market in December 1995. "I did not think things were as bad [as they turned out] " he said last week. " I've always told analysts that it would take me two years to turn the company around. It took me a couple of months just to identify the alligators and it took the management team about 12 months to identify all the problems " he said.
Although GTSI sells information technology solutions Young said one of the company's key problems was its own internal "information systems infrastructure we had to rebuild it."
GTSI has also restructured its top management team during the past month with Joel Lipkin a former vice president of Zenith Data Systems Corp. taking over as GTSI's vice president of program management. Young said Lipkin who guided ZDS through its wins of major Air Force PC contracts during the past decade will also manage bid preparation for the company.
Lipkin succeeds Paul Cantwell who left to join Cisco Systems Inc. Peter Janke GTSI's chief financial officer also plans to leave the company to pursue other interests Young added.
Cromwell Coulson an analyst with CC Partners Ltd. endorsed the write-offs and expressed confidence in Young's ability to turn the company around.
Coulson viewed internal information systems as essential to GTSI getting the most out of its tight margins. "GTSI's business is picking nickels up in front of a bulldozer." Good information systems will allow the company to grab every nickel he said.
Bob Dornan senior vice president of Federal Sources Inc. said the liberalization of GSA schedule polices and procedures could hurt GTSI because PC manufacturers "now have less of a reason to go through a middleman like GTSI." But he said "If anyone can turn GTSI around it's Young. If it's fixable he can fix it.