How Two Misinformed Brokers Allegedly Sent CSC's Stock Flying
The debut in this issue of Washington Technology's very own stock page reflects either good or bad timing given the beating that technology stocks took last week during the New York Stock Exchange's busiest day of trading ever.
In an effort to tailor a stock listing that reflects the dynamics at work within the systems integration industry, we have listed the stocks of not only large infotech integrators and developers, but also a number of infotech companies based in the Netplex, the integration industry's very own hometown.
In the coming weeks, we will likely be tweaking our list and adding a few more stocks, as well as some customized indicators to better assess the climate of the integration industry. WT's Wall Street Review is on page 16.
Last week was truly a memorable chapter for most technology stock traders including those whose portfolios held the stocks of infotech services companies. Electronic Data System's stock climbed to a high of $52, up $6 from the week's low of $46 a share. The stock's activity generated some genuine excitement for the integrator, which only last month began trading its stock again publicly after splitting from General Motors Corp.
Regardless of whether EDS' stock was only responding to the week's roller coaster ride, the activity of the services company's shares is worth mentioning given Wall Street's seemingly understated appreciation for the IT services industry. In the past, Wall Street's limited enthusiasm for IT services companies has been reinforced by several celebrated episodes, including one alleged to have occurred last fall following an IBM conference call with stock analysts.
What is known to be true is that IBM's financial management indicated that the company was evaluating the acquisition of different IT services companies. What happened next depends on who's telling the story, but one of the more colorful accounts expands on the following dialogue between two misinformed brokers.
First broker: "Did they say IT services companies? Errr, what's that?"
Second broker: "You know, like um, well, like CSC."
First broker: "CSC. Who are they?"
Second Broker: "Computer Sciences Corp."
First Broker: "Did you say Computer Services Corp.?"
Second broker: "No. Computer Sciences -- as in scientist."
First broker: "Oh, so, IBM wants to buy this science outfit, huh?"
Second broker "Yeah, IBM is trying to buy CSC."
Within days of the IBM briefing, CSC's stock jumped nearly $10, causing both IBM and CSC to suggest there had been an apparent miscommunication within the financial community.
Rumors? How do they get started anyway? In the case of IBM and CSC, both companies would have us believe the rumor had been triggered by a discourse that resembled the above dialogue. And given Wall Street's somewhat limited familiarity with IT services, many of us were satisfied by the explanation. By prodding Wall Street to take a closer look, EDS and CSC may help change things. For the brokers' sake, let's hope so.