In the fall of 2003, our scouring of the markets in search of contrarian sectors led us to technology. This once-beloved arena, with its “new” paradigms, had been relegated to the scrap heap alongside the eight-track tape player.

Naturally, this piqued our interest. One outfit that captured our funds was Analysts International, an information-technology consulting and services firm that focuses on custom software application development and staffing needs.

Analysts is not an infant company hoping for revenues. In its heyday, sales exceeded $550 million (US); but, caught in the Internet squeeze, they fell to the $332 million level last year. Since 2001, the company has suffered losses year after year, bottoming out at more than $21 million in 2002. Last year, the red ink diminished to $1.5 million.

This year, the corporation has been profitable for the first three quarters and it looks as though it will remain in the black for the foreseeable future. Last week, it raised fourth-quarter profit guidance to five or six cents per share.

During the downward spiral, the company did manage to keep the balance sheet pristine. There is zero long-term debt, which always impresses us, and the book value is just under $3 a share, close to our purchase price of $2.92.

When bought in December 2003, Analysts traded, on average, more than 90,000 shares a day. That has shrunk to around 50,000. There are fewer than 24 million shares outstanding, making for a modest market cap of less than $100 million.

This pales in comparison to competitors Accenture, Computer Sciences, IBM, and Keane. As you can imagine, these big strapping guys are stiff rivals, undoubtedly sullying the prospects for our “little” company.

In January, Analysts purchased WireSpeed Networks, a company specializing in Internet protocol telephony and wireless networking. Key factors leading to the purchase of this enterprise were desires to strengthen their presence in new technologies and enhance the relationship with Cisco Systems. The possibility of further acquisitions remains foremost in the mind of president Jeff Baker.

One question we are often asked is, “How long do you expect to hold the stock?” We never know, and given that our target prices are normally at least 100 percent higher than our purchase prices, sitting for a number of years is normal. Analysts currently trades at $3.81, well below our target price of $10.84 and miles below the $30 where it crested. Unless a surprising takeover occurs, we expect to be shareholders for many moons.