Well, this is interesting. Science Applications International Corporation (SAIC) is a pretty famous employee-owned consultancy that specializes in scientific assistance, engineering help with advanced technologies, and IT. They do a fair bit of military work, including an interesting RFID contract with the National Center for Employment of the Disabled (NCED) in El Paso, Texas that I covered recently. But that isn't the story.
They're currently in the middle of a capital restructuring and IPO after taking a serious loss on work for the 2004 Athens Olympics, but that (in and of itself) isn't the story, either.
The interesting story is that Local 1877 of the Service Employees International Union has set up SAIC IPO Watch, a blog about the process. It intends to cover the likely cost of taking SAIC public, including a discussion of who might win and who might lose as a result of the IPO process; as well how the market might respond to a SAIC IPO and how that might impact employees and shareholders. It looks interesting as an different point of view on the whole process, and the author(s) appear to be doing their research.
SAIC has its own IPO mini-site, of course, but this is definitely a new wrinkle in the industry. Or, as far as I know, any industry. Expect to see more of it.
Do you think it's a good wrinkle?
good
In this case, I'd say it's an unrestricted good wrinkle. Why shouldn't the employees have a venue, especially in an employee-owned firm?
Since people putting up the site already have a stake in ethe company, the incentives are all aligned appropriately and sabotage would be self-defeating. They seem to want to make sure the refinancing and IPO don't become a top executive heist in disguise - which such things sometimes do. There also appear to be semi-spoken concerns about SAIC becoming a "manage for the quarter' organization, which would be a conflict with the present culture and may or may not be ideal for a consultancy of their type. All legitimate concerns, worth airing.
Without that ownership factor, however, there are definite opportunities for unaccountable mischief on a union's part, especially given the ability to use blogosphere anonymity and "cut-outs." Future cases will probably be more of a mixed blessing.
There's nothing wrong with the voices of those who work in a company being heard at such times; indeed, it can be a needed corrective. Union leadership does not always correspond to that, however, and there are opportunities to do a company great harm at a vulnerable time - or threaten to - with stories true and untrue.
So along with the good, bad things will happen. The idea was nearly inevitable, and the tools are all there. So the trend will pick up steam. Which means that at some point, abuse is nearly inevitable.
I wouldn't be surpsie to find a union facing a fairly substantial libel suit some time within the next 10 years over its activities during a major financing or IPO. It will certainly make for an interesting case.
Well, I hope it's not a frivolous libel suit. I can see that happening, too, as a speech-chiller.
This blog about the process is an interesting development, and although this isn't an arena I follow, I'm shocked it hasn't happened previously.
Interesting. Though I woudn't say 'unrestricted good' just yet. Joe. One obvious question raised would be the SEC pre-IPO 'quiet period' regs. It's certain these cover executives. In most cases rank-and-file are also told to clam up, except in existing business relations and genuine sales efforts. What's the regulatory outcome when rank-and-file have a non-company mediated path for information flows to the public, including potential investors? Yet another case where citizens' media imply some new regulatory / legal issues.
As an investor, this would also cause me to immediately scurry off and find out what fraction of the SAIC workforce was covered by SEIU and what positions are held by the unionized personnel. It would be rather unusual, though not unprecedented, for a professional services operation to be (partially) employee owned and also substantially unionized. But, since I'm not buying IPOs now, I'll leave that as an exercise for the interested reader...
Interesting, Joe. I haven't followed SAIC lately.
However, I would suggest that consideration of an IPO may be due as much to Beyster leaving in 2004 as anything. IIRC he owned a founder's class of stock that differed from the class my husband and others owned during the late 90s. Again, my memory is vague but I seem to recall that that class of stock wasn't factored into the regular stock re-evalutations, or at least not on the same basis.
We probably have SAIC people reading here from time to time and perhaps some of them want to verify or correct this. I'd dig into the SEC filings but have limited online access at the moment.
There is no SAIC Union. This site and the Service Employees International Union is not related to SAIC in anyway. The Service Employees International Union looks to be an investment group.
My experiences with SAIC employees have been fair. Further, knowledge transfer with SAIC employees was counducted within the SOP's of the IT Industry.
SAIC has never been unionized. It has never had the need. SAIC employees know you sink or swim on your own efforts instead of living off the craftiness of a union agatator. I am going to become pretty well off as a result of this little deal and thank God every day that I kept my SAIC stock in the Vanguard account it was in for the ten years I worked for SAIC. All I can say is HOORAY for our side!!
As said in other posts, SAIC doesn't have a union. The only thing we could figure out regarding the Services Union was that they didn't like the idea that the company (aka: the Employees) would still maintain control due to the 10/1 voting ratio of preferred vs common stock. SAIC needs the public markets, but we're not so stupid as to give up total control. IMHO, this is going to be a great deal not just for the employees, but also for anyone else smart enough buy stock after the IPO. SAIC is a premiere company with nearly unlimited potential. As Ken said, "HOORAY for our side!!"
In my openion, SAIC has a lot of competetion from the likes of ACS, CSC, EDS, UIS, INFY, WIT, IBM, HPQ, ACN, CapGemenia and many other vendors.
There is an excellent movie about this with Danny Divito and Richard Saxton called Other People's Money.
I wonder what the Fair Valuation of Saic is these days?
$13-$15 per share opening...
Value? - I would hazard a guess at double.
If initial IPO price range is 13-15 and there is dividend of 10-15 per share, even at high range of this, it would amount to $45 per share. Currently,SAIC is priced at 47.28.. And, there are also tax consequences of dividend. So, is this really good deal initially? I know the stock price can go up, but this doesn't seem as good a deal as initially presented.
Is there a stock split or something?
IPO Price 15 USD/ Sh
Dividend 15 USD/ Sh
=================
Total Price 30 USD/ Sh
EDS Market Capitalization = 14 to 18 Billion USD
CSC Market Capitalization = 8 to 10 Billion USD
ACS Market Capitalization = 5 to 6 Billion USD
UIS Market Capitalization = 2 to 3 Billion
SAIC Market Capitalization = 4 to 8 Billion USD
In my openion, the Tech sector is undervalued due to competetion from Indian, European and Chiense companies. One of the issue is the artifical undervaluation of the Yuan, Rupee and other currencies in relation to the Dollar.
You will notice that companies such as Infosys, Wipro, Capgemeni have a larger Market Capitalization. I think it allows fund managers to hedge their currency position in various markets.
Congratulations to the thousands of SAIC Employees and Investors. Looks like the stock opened well above the IPO price.
I still don't understand how this is good for me as a SAIC Employee. Before the IPO, the shares of stock that I own were worth 47.28. It seems now they are only worth $45. And, you take into fact the tax consequences of dividend, that means that I am losing even more money. Can anyone explain how an IPO can raise over a billion dollars and employees LOSE money?
Bill,
I am in agreement with you. I posted message #14. If you take away for a moment that the price has gone up since IPO, we would have lost money on the deal. Even with the rise, if we have to pay taxes for cash dividend on money in our retirement account, I don't think we are still ahead at 18 dollars.
I agree with the previous post. My 401K seems to drop dramatically. Even with the dividends, I would still be loosing money.
Fair value estimates put SAIC's stock price in the $10 to $20 per share range, 12 to 24 months out. In order for SAIC's stock to move above the $20 dollars a share range, there would need to be a pickup in the IT industry.
We retirees of SAIC got screwed! We had shares worth about $47. After the IPO we have shares worth about $34. We have yet to see the promised dividend of about $15 worth of value. Even then we are just about even. The dividend was to be a payback of our share of our company they sold. Instead it at best gets us even and they sold our company and paid us NOTHING!! This is no dividend, this is just a makeup to keep the masses placated. Robbery is what I call it.
I agree with you wirerod. Where is this big winfall I keep reading about in the papers that the SAIC employees are to get after the IPO. I would say some would have been worse of if the money on our retirement account were given as cash and we had to pay tax on it as originally planned. At least they won't make us do that, but still, now we have the added volatility of open market with the same stock price. Something just doesn't add up.
Okay. So, I just got my retirement statement and it dropped dramatically because the "dividend" was taken out and they're still waiting on a ruling from the IRS if we can roll it right back into the retirement account or if we have to take a payout. Sounds like the deal was handled very poorly. Thousands of people have had their retirement accounts plummet and have to pay taxes. Anyone know what law firm handled the IPO?
There are market rumours that some SAIC techs have improperly accessed client mailboxes.
What I have heard is this,
7 out of 10 times it is the mailbox owner that has asked the sysadmin to log into their mailbox.
2 out of 10 times it is the management that has asked the technology department to log into various mailboxes.
1 out of 10 times it is an internal or external hacker.
What we are after is the removal of Trey P. Smith
and John H. Warner, Jr. The rest of the team can fill them in on the issues are, including calls tracing back to the offices of SAIC in San Diego as well as client offices in San Jose. If still not sure then the SJPD can fill them in deeper matters. Still not sure then the DOJ and DOD can fill them in on larger issues.