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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Wednesday, January 16, 2008

Beltway Bet: Beaten-Down Detica

Thomas Black, chief executive of British tech consultancy Detica Group, has 200 employees tending to civilian government and military clients in the U.S. He wants to bring that number up to 1,000 in the next few years.

"That is our ambition," says Black, Scottish of origin and 48 years of age.

But lately, such lofty ambitions haven't been reflected in Detica Group's share price. The London-listed stock has dropped 12% (in U.S. dollar terms) thus far in 2008 and 53% from a 52-week high of $8 last July.

With the sell-off, Detica shares look interesting.

Why the stock drop? Detica's customer mix is one culprit. Founded in 1977 as a boutique providing information security services to U.K. defense customers, Detica specializes today in business intelligence--the analysis of huge amounts of data to weed out fraud, manage risk and gain competitive advantage.

Government clients still account for three-fifths of the company's $307 million in revenues for the year ending last March. But 27% of Detica's sales came from financial services clients. Given the grim parade of big banks posting subprime-induced losses, the concern here is that spending on things like business intelligence will freeze.

There are also doubts about the public sector side, notably Detica's plans to push into the U.S. market. Last spring, the company created its DeticaDFI unit with the acquisition of DFI International, a 200-person Washington consulting group focused on budgets and counterterrorism. Building from there could be tough.

Full story at Forbes.com