Knobias ClipReport (8-13-2007)

Submitted from Knobias ClipReport

Friday’s session saw fear again in the trading throughout the morning hours as liquidity issues that have been known for some time finally caused action from the Fed through open market transactions. The injection of dollars through the repurchase could quell the panic of a global credit crunch, but many were talking about an emergency Fed meeting to cut the rate as well.

With or without the emergency meeting, the open market transaction displayed the fact that the Fed was listening to the market and its participants. The only problem may be that their reaction time is painstakingly large, and the delay could be more harmful in some situations. While the market begins to price in a rate cut in September, the waiting begins for the next hedge fund, builder, or mortgage behemoth to fall causing another panic.

While the market decides the direction it wants to go, proactive managers could be preparing for cutbacks and higher efficiency to keep their bottom lines from eroding. One name to watch could be DiamondCluster International, Inc. (DTPI)

The Company is a global management consulting firm that helps companies reduce costs, increase flexibility, address changing regulations and markets, improve operations, and grow their businesses.

The Company operates in the consumer packaged goods, financial services, healthcare, insurance, logistics, manufacturing, retail and distribution, telecom, and public sectors.

The public sector is where they were just recently awarded a fairly nice contract. On Friday, the Company announced that the firm has been awarded a Management, Organizational, and Business Improvement Services (MOBIS) contract with the U.S. General Services Administration (GSA).

According to the GSA, companies placed on this schedule “possess a thorough knowledge of quality management theory and practice and have demonstrated that they are capable of providing expert assistance to Federal activities.”

Adam Gutstein, Diamond's President and CEO noted in the press release, “This is another milestone in Diamond's strategic initiative to pursue opportunities in industries like the public sector that run counter-cyclical to traditional economic trends. The opportunities for working with federal agencies under the MOBIS contract are a perfect match for our capabilities in working at the intersection of business and technology, strategy and execution.”

MOBIS is a Federal Supply Schedule offered to federal agencies by the GSA to provide them with a streamlined procurement device to access management services for the implementation of quality management and other related system change processes within their agencies. The contract carries an initial performance period of five years and covers two Special Item Numbers (SINs).

On August 7th, the Company released the results from their first quarter. DTPI reported net revenue from continuing operations of $47.9 million, compared to $40.9 million for the same period in the prior fiscal year. The Company reported diluted earnings per share from continuing operations of 12c compared with 6c in the same period last year.

For the rest of the fiscal year, the Company noted that they expected earnings to be at least 42c with analysts expecting 51c next year. The expectations give the company P/E ratios of 23 and 19 respectively. The ratios are fairly in line with comparables but most likely do not take into consideration the new GSA contract and with that in mind and the way the market could be turning, investors would be wise to watch.



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