SAIC To Actually Go Public?

from the didn't-see-that-coming dept

Fri, Sep 2nd 2005 2:16am — Mike Masnick

If you're at all familiar with the history of SAIC, the huge, but tremendously secretive, government contracting firm that is famous for being "employee owned," it seems quite surprising to hear that the company is actually going to go public, in an attempt to raise nearly $2 billion. For years, employees could buy and sell stock from the company, but the price of the stock was determined regularly not by the public markets, but by an auditor who would value the company. As employees left, most were required to sell back their shares. It was a system that worked, as the company grew -- but this year, the company's 80-year-old founder, J. Robert Beyster, finally stepped down. It appears that the new folks in charge have decided to make a big shift in strategies by going public. Perhaps they realized they wouldn't be able to pull off another Network Solutions deal, where they bought the company for a few million, kept control while the company had full monopoly control over internet domains, and then spun it off for a few billion just before life got more difficult for the firm. It will definitely be interesting to see how the firm adjusts to having outside shareholders. They used to claim that part of their competitive advantage was that they weren't distracted by the whims of outside shareholders. Update: Thanks to an SAIC employee who posted a comment below explaining some of the rationale... which was basically that SAIC was propping up the stock itself by buying all the available shares, since employees weren't buying enough. Apparently, that was becoming way too expensive.

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25 Comments

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Wayne, 2 Sep 2005 @ 6:58am

The reason SAIC is going public
I am a long-time SAIC employee and can speak first hand about this. The idea of SAIC going public is not new. This is not a new idea from the new CEO. It was first mentioned years ago by Byster. As far as I can see, there is only reason to go public, but it is a big one.
The quarterly stock trades are undersubscribed�that is, there is always more stock to be sold than there are buyers. In has been as much as a 10 to 1 ratio of sell to buy. In the last sale it was about 5 to 1. It has been about 10 years since the trade was balanced. In an open stock market, this imbalance would drive the price down until the buyers and sellers matched each other. However, the company sets the stock price and so this method of equilibrium is not possible. SAIC can, but is not obligated to, buy the extra stock at the current price to balanced the trade. So far, they have always done this. However, they have spent 2-3 billion dollars doing this.
They have tried programs to encourage buyers and discourage sellers, but this has not helped enough. They can�t keep spending the money to buy back the stock. If they lower the price of the stock, they would just panic people into buying less and selling more. And if they stopped balancing the trade, no one would buy anymore stock. So, there only alternative is to find more buyers and the way to do that is to go public.
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- nonuser, 2 Sep 2005 @ 5:18pm
  
  Re: The reason SAIC is going public
  Does SAIC make money on their America's Cup design projects, or is that a morale building/recruiting tool thing?
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  - Bill, 14 Sep 2005 @ 12:44pm
    
    Re: The reason SAIC is going public
    Beyster loved to sail. Beyster loved technology. The Cup was his opportunity to do both.
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- Roy, 16 Sep 2005 @ 11:08am
  
  Re: The reason SAIC is going public
  I was a 7-year SAIC guy...transferring only because they lost the contract. In the late 90's...this was a stock that could easily rise 20 percent a year. In the last 3 years...things have cooled. I won't say its over-priced...I know people who still buy a fair amount. I know of one gentleman who stood with the company for 15 years...and had easily $1 million by the final year (he never invested prior to coming to the company). He max'ed every penny he could and he saw the best years increase the value. Most guys who work with the company...will swear by it. And the stock is simply a nice part about working for them. I hold around a 1,000 shares still...and would wish for a public offering...but won't hold my breathe. If it comes...so be it.
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- Benjamin J. Brown, 25 Sep 2005 @ 2:42pm
  
  Re: The reason SAIC is going public
  One the surface a company like SAIC could be an asset to the Public equity market. As I say, one the surface. As it has been said, SAIC is highly secretive. Why is that? To be sure, certain government work is sensitive and classified. But what about SAICs' work in Grants Pass, Oregon? They operate a massive clandestine Human subliminal science lab which is savage and merciless. Non-consensual Human Beings are "subjected" to an endless barrage of subliminal RF microwave assaults the impact of which is enhanced through the covert insinuation of various psycho-toxins. People are held in "incommunicado isolation", denied access to legal and medical remedy. The content of SAICs' attacks on subjects is insanely sexual. The crazy military-industrial paranoia and excesses of SAIC is enabled through measures such as Public Law 85-804 which holds them immune from prosecution. No one in GP is safe from SAICs' barbarity and no one can get away from this non-idiopathic conspiracy. No one truly concerned about basic Human Rights and Civil Liberties can long ignore Grants Pass, Oregon. It is clear that SAIC is accountable to no one.
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  - Dr. Smith, 30 Sep 2005 @ 7:36pm
    
    Re: The reason SAIC is going public
    Mr. Brown,
    
    You obviously are a victim of the experiments you referenced in your posting. Please seek professional mental counseling - immediately!
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    - Benjamin J. Brown, 25 Jan 2006 @ 4:45pm
      
      Re: The reason SAIC is going public
      Dr. Smith, You clearly did not read the post as throughly as your moniker might indicate. Affected People are denied access to proper Health care, including so-called "mental health". I suggest those of you hawking up this SAIC IPO swill take a look in the mirror and then look at the SEC code. Either way,vampire or vulture, you will be slaughtered. And you know it.
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  - Reality, 13 Oct 2005 @ 7:00am
    
    Re: The reason SAIC is going public
    Ben,
    
    This is Reality, I know we haven't talked in a while, but it's time for the nice man in white to make the voices stop.
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    - Benjamin J. Brown, 25 Jan 2006 @ 4:56pm
      
      Re: The reason SAIC is going public
      If the man in white, as you say, is constructing for SAIC explosive devices to be placed in and then detonated in clandestine subterranean Human science labs utilizing subliminal RF microwave weaponry then that most certainly would make the voices stop.
      
      The problem is, as is my understanding, is that many of the operations in clandestine Rogue Valley has nothing to do with subliminal activities. Allegedly only 3-5% of the 3.7 square miles of the area underground is dedicated to these despictable programs. Only 3000 of the 85,000 people employed down there involved in PsychOps. Cowards intentionally place these secret "billion dollar baby" operations in areas where the likelihood of intervention, as described above, is minimal.
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      - maamaa, 16 Feb 2006 @ 12:26am
        
        Re: The reason SAIC is going public
        Brownie, you're doing a heck of a job -- as a loon!
        
        Suggest you turn off your computer because the subliminal RF emanating from it is frying your brain!
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      - Arfadog, 14 Oct 2006 @ 6:52pm
        
        Re: Re: The reason SAIC is going public
        Well, it's high time that someone is finally "on" to SAIC. Great work, Mr. Brown.
        
        Now that you've finally disclosed the truth, you shouldn't be afraid to disclose that the 16,000 people who work for SAIC in the Washington, DC metro area are engaged in incredibly sophisticated work intended to replace the program we like to call Social Security with an effort that will fund old age and disability by selling freeze dried tacos over the Internet. They're going to call it Hi-Tex-Mex.
        
        Pardon me, I have to go now. My tinfoil hat is receiving a transmission from The Leader.
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  - Ross, 8 Sep 2006 @ 12:36pm
    
    Re: Re: The reason SAIC is going public
    That's probably the craziest thing I've ever heard!....if I had kid's I'd keep them far, far away from you.
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- Amanda Sylvia, 23 Jan 2006 @ 10:37am
  
  Re: The reason SAIC is going public
  When is it going public?
  Please let me know.
  
  Thanks,
  Amanda S
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Graham Gilmer, 15 Mar 2006 @ 4:37pm

Re: The reason SAIC is going public
I see your point about the M-factor's relationship to market share, but in SAIC's case I don't think it will have as dramatic of an effect. Qualcomm was in patent-heavy competition with Motorola and others regarding CDMA and it was a win or lose situation. Q came out ahead and as a result the stock skyrocketed. SAIC wins and loses contracts against competitors like GD but no contract has the potential to exclude others from the market share quite like Qualcomm's CDMA patents.
In reality, the M-factor closely follows the pulse of the defense industry overall (modeled by the companies that SAIC tracks), and the pie grows or shrinks for all of them at approximately the same pace.

The M-factor has certainly been set rather conservatively in the past and I think the stock will react well to the public market.
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Graham Gilmer, 15 Mar 2006 @ 4:37pm

Re: The reason SAIC is going public
I see your point about the M-factor's relationship to market share, but in SAIC's case I don't think it will have as dramatic of an effect. Qualcomm was in patent-heavy competition with Motorola and others regarding CDMA and it was a win or lose situation. Q came out ahead and as a result the stock skyrocketed. SAIC wins and loses contracts against competitors like GD but no contract has the potential to exclude others from the market share quite like Qualcomm's CDMA patents.
In reality, the M-factor closely follows the pulse of the defense industry overall (modeled by the companies that SAIC tracks), and the pie grows or shrinks for all of them at approximately the same pace.

The M-factor has certainly been set rather conservatively in the past and I think the stock will react well to the public market.
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SAIC IPO Watch, 20 Mar 2006 @ 4:03pm

New Blog and Bulletins on SAIC IPO
Very interesting discussion. You all should check out the new report, SAIC IPO Watch, at www.saicipowatch.blogspot.com for more information about the possible costs of going public.
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Verne McCardle, 14 Aug 2006 @ 11:05pm

SAIC accident waiting to happen
I eagerly look forward to the SAIC IPO, as the company's management will finally undergo some review and oversight by Wall Street. Management in the company is a joke, as anyone has a license to bid on contracts - there is no strategic marketing effort. Just look at the website: the company claims to offer services in any industry
My prediction: the company's stock price will jump 20 to 30% at IPO, and then steadily decline over two years to a price that is 10 to 15 dollars below the current price. Ken Dahlberg will resign within one year of the IPO, declaring the IPO a success, even though employee shareholders sell as soon as allowed by the terms of the IPO; most employee shareholders will lose 10 to 20% on the IPO, while those executives holding B class shares will make 100 to 200%. Within two years of the IPO, SAIC will merge with BearingPoint.
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- Arfadog, 14 Oct 2006 @ 6:57pm
  
  Re: SAIC accident waiting to happen
  Verne, do you work at SAIC? Do you make your living making predictions? If so, maybe you could tell us which market segment SAIC will enter next and make into a $1B per year business.
  
  Do you make football progmostications, too? Where can I get onto your newsletter?
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Jay, 22 Aug 2006 @ 5:19pm

Honest truth
Actually most employees are concidering using their special Dividends to move to clandestine Rogue Valley for more "RF treatment, insinuations of various psycho-toxins and insanely sexual, military-industrial paranoia"..I know I was looking forward to it.....Moron.
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Joe H, 2 Oct 2006 @ 9:52am

SAIC Share Price
Well it appears from the shareholder meeting last week thatgoing public has been approved.

I reviewed the ammendment to the S1 filed today and I was very disappointed in the initial share price.

http://www.saic.com/saic-ipo/S-1.pdf

It seems very low and the likely of making a good profit could very well be low. The dividend appears to be very good but the two for one split is someone poor for a $47 share price we currently have now.

Does anyone have any opinions on the latest news?
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- Anonymous Coward, 3 Oct 2006 @ 2:06am
  
  Re: SAIC Share Price
  I find it interesting -
  
  Current price = approx. $48 per share
  
  Est. IPO Price = $15 per share. x 2 for 1 Split =$30 for 2 Share new Stock
  
  $30 for 2 new stock Plus $15 per share dividend = $45.
  
  Fuzzy Math or something fishy? Where is the pat off of having the old stock?
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Joe H, 3 Oct 2006 @ 6:29am

Re: SAIC Share Price by Anonymous Coward on Oct 3r
Anonymus,

Thats what we thought.This "appears" to be a Ken D.and the board burn and run attempt. The people at the top seem to always take care of themselves even if they come off in a genuine manner.

Most employees receive very few options like "20-100 shares vested over 5 years" . So in a nutshell most SAIC stockholders slopped their own money into the stock plan.

It makes no sense for anyone who had the stock for less than 3 or 4 years. Even if if we do get a 20% gain somehow rest assured the taxes will burn that gain anyway.

Look at what the executives who have class B stock have in their treasure chest. It does not appear they will be getting soaked!
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- Gomer, 6 Oct 2006 @ 6:00pm
  
  Re: Re: SAIC Share Price by Anonymous Coward on Oc
  Class B is no different from Class A in any respect other than quantity, i.e., one share of Class B = 20 shares of Class A. Same is true for the dividend. The tax implications are the same. There is no secret treasure chest or special dividend for B share holders. They simply refused to exchange them for A shares and the subsequent split of A shares. A shares are (were) subject to SAIC buy-back, B shares are (were) not. Simple as pie. Or Pi, if you're an engineer/math type.
  
  Get your facts straight, please sir or madam.
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Benjamin J. Brown, 15 Dec 2006 @ 4:09pm

saic
This IPO (Pi Op 3.1416) stands to put SAIC into the stratesphere economically. With the "Red Storm" super computer system at Sandia calculating Pi to nearly 5 trillion a 2% cut of that would be around $100 billion. Clearly C.O.E. (continuation of economy) is important but most secret laboratory subjects resent having this bizzaro alphametrical system imposed upon them and being tortured and conditioned subliminally to go along with it. SAIC filed a secret H2 visa on my brain and body on 9/5/03 and had 3 years to get it done. They have failed and all thats left is sadisitic brutality. Of course they have other lab subjects to drag into their pathetic world of demonic scientism. Yeah, sure, SAIC are real N.I.C.E. people...too bad a major part of their revenue base is of secret GP security. Not to worry though...when their subterraean crews pop-up their bio-resonance numbers (intra-cranial and neck micro implants) will be plastered everywhere. As Bob Marley said in his song "One Love"..."there ain't no hidinG Place from the Father of Creation".
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ACME, 25 Jul 2012 @ 5:44pm

Focus
What is the conclusion military interested persons. National Security which equals Global Security is at hand

regards, god bless, and god speed

ACME PIPE (proprietary intellectual property engineering)

Point= Infinity (on paper or in the air)

Sstrategic Bloggin of military companies will protect global/domestic tranquility

if anyone could help me i forgot of SAIC's competitors classification like NEK there is one i am looking for they helped the banking fraud crisis and recently won over an SAIC contract...not the LMT one..., yet recently found out about a new technology classified company in the blog above called Bearing Point...are there any more in this Class or is the Next step up...the next class like GD...

again godspeed on the journey of life and in the timeless and serene moment of each day
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