Every six months, more or less, IT company Ness Technologies Ltd. (Nasdaq: NSTC; TASE: NSTC) surprises us with a large contract won by its defense division TSG. All these contracts are similar: they all include command and control technology for defense forces, the customer is always anonymous, and the value reaches tens of millions of dollars for Ness's technology itself, not just for services, as happens in the case of its regular contracts.
This time, the contract is worth $16 million over two years. Ness will provide a training and simulation system to an unnamed country's national command and control center. The solution will be based on Ness' sophisticated Integrated Command and Control System (ICCS), which Ness implemented for the purchasing country beginning in May 2008, and a simulation product.
"The fact that this is a follow-on by an existing customer in defense projects is a breakthrough," claims Ness CEO Sachi Gerlitz. The advantages of an agreement of this kind can bee seen in Ness's margins. The company posted gross profit in 2010 of 27% of sales of $570 million, mostly sales of services. The margin for a project in which Ness supplies a software product based on its own technology can reach twice this.
Published by Globes [online], Israel business news - www.globes-online.com - on February 14, 2011
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