News on FLNK deal with MSFT.
Friday May 28, 8:31 am Eastern Time
Company Press Release
SmallCaps Online LLC -Formerly Bridge Technology Group LLC- Announces Investment Opinions on FutureLink Distribution Corp. and Microsoft Corp.
SmallCaps Online LLC (Formerly Bridge Technology Group LLC) Comments On FutureLink's Deal With Microsoft
NEW YORK--(BUSINESS WIRE)--May 28, 1999-- Visit SmallCaps Online's Web Site at www.SmallCapsOnline.com for
Detailed Report
SmallCaps Online LLC (formerly Bridge Technology Group LLC) commented today on FutureLink's (OTC BB: FLNK) deal with Microsoft (NASDAQ: MSFT - news). The full text of this report can be accessed at SmallCaps Online's web site, at www.SmallCapsOnline.com.
Excerpts from the report follow:
FutureLink Distribution Corp. recently announced that it will offer subscriptions to Microsoft Back Office products such as MS SQL Server, MS Exchange and MS Windows NT Server to the new software rental, or ASP, market (see below for a description of the ASP market). FLNK is the first ASP in the industry to begin a pilot study with MSFT, which we view as a significant validation of FLNK's business strategy, management team and the quality of service provided. As part of this agreement, MSFT agrees to offer its back-office products on a monthly Server License Subscription basis for at least two years. Benefits to FLNK include:
- Potential for Margin Expansion: One of the most significant
capital expenditures for FLNK and other ASPs is the build-out of
server farms and the licensing of ''back-end'' server operating
systems. We believe FLNK's agreement with MFST will enable FLNK to
price its ASP offerings more competitively, will reduce capital
expenditures on server farm build-outs and will allow FLNK to
better accommodate short-term users. This should enhance FLNK's
marketing efforts and should provide for margin expansion over
time.
Validation for FLNK & ASP Model: We believe MSFT's decision to offer its Back Office product suite to FLNK on a monthly subscription basis is a very significant endorsement for the ASP market in general, and FLNK specifically. Many enterprise software packages, and ''front-end'' business office software, are built to run Microsoft operating systems. The ability to offer monthly subscriptions to the Microsoft Back Office systems (which will be essentially transparent to the end-user) should greatly enhance pricing flexibility for FLNK and other ASPs, and expand the breadth of ''front-end'' applications that can be offered on a rental basis. This appears to be recognition, on the part of Microsoft, of the emerging ASP market and the growing demand by consumers, particularly small businesses which FLNK targets, to license software on a ''rental'' or ''subscription'' basis, and to leverage the economies of server-based computing.
FLNK is building a leader in the emerging new industry called Application Service Provision (ASP), or the provision of software applications to users on a rental basis, either over the Internet or through traditional networking means. Independent market research firms estimate that the market for application software rentals will grow from virtually nothing a couple months ago to several billion dollars in two to three years. We continue to recommend purchase of FLNK common stock by investors tolerant of the risks associated with small-cap equity investments.
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