American Management Systems Rebounds

American Management Systems Inc. seems to have shaken off the malady that has hurt its stock in recent months.

The Fairfax, Va.-based provider of technology consulting and systems integration services has reported a series of new and pending contracts. This has reassured investors about a healthy pipeline of future revenues, said Moshe Katri, director at UBS Securities in New York. He expects another major signing soon.

American Management Systems mostly serves telecommunications companies and financial institutions. It is also a major government contractor.

"People are very happy that they are starting to get some contracts, and that's why the stock is up," Mr. Katri said.

Since hitting bottom in early March, at $17.25, the share price has risen steadily. It stood at $26 late Friday.

The stock lost more than 53% of its value between December and March. It took a hit because of lingering problems associated with an undisclosed European-based telecommunications firm, a multi-phased contract valued at $50 million.

Delays in the work had a negative impact on 1996 revenues and profits, and American Management Systems was forced to restate its earnings. "The company dealt with it well," Mr. Katri said. "It decided to take a charge (of $18 million) for fully delivering the contract, which the market really liked."

American Management Systems' most recent deal is with the Federal Retirement Thrift Investment Board, a contract valued at $29.7 million.

The Thrift Investment Board, an independent federal agency, manages a $50 billion savings plan for 2.3 million current and former government employees. The agency wanted a new recordkeeping system to improve its customer service. The savings plan currently provides only monthly valuations.

The three-year project with American Management Systems "will give participants extended investment options, daily valuations, and new services," said Frank Bianchi, vice president at the technology company.

Mr. Bianchi said the new system will use software from SunGard Data Systems Inc. and will entail the use of computer-enabled telephones, automated voice response systems, and Internet capabilities that will let participants review investment status and conduct transactions.

More than 200 companies were invited to bid on the program, officials said.

"The contract is a good sign," Mr. Katri said "Now we are looking for the company to come out with more contracts in the telecommunications/services area."

Observers also noted that other recent events may bode well, such as the apparent lock American Management Systems chairman Charles Rossotti seems to have on the commissioner's post at the Internal Revenue Service.

Mr. Rossotti, who cofounded the systems company in 1970, is undergoing the necessary background checks before a congressional confirmation process.

"My sense is that he will be going and that he's excited about the challenge," said a Wall Street observer, who requested anonymity. "It's too bad (American Management) will lose him, but on the flip side, it's always nice to have contacts in high places, especially if one of your markets is with the government."

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