GNET Special Meeting 6/17/1999
All the business before the meeting was passed without dissent from the floor. Those issues have been pretty well covered here and the will of the company was done. The meeting was then adjourned.
With the official business done, Russell made some remarks and answered questions from the floor. What follows is a shorthand version of the highlights, but the VERY short form of the report is that RCH is very optimistic about the future of the company. As usual, he spoke very well and engendered a great deal of confidence in the crowd, which numbered two hundred or so stockholders, a couple of reporters, and his mother.
The future is in broadband and GNET is well positioned for this next phase of the internet business. PA's Charter Communications & High-speed Access companies are the fourth largest cable conglomerate now, and are continuing to grow. GNET expects to launch its broadband portal in the 1st quarter of next year and will maintain its flexi-bility by supporting multiple platforms.
The goal of becoming a Top Ten internet company is ever more attain-able, through vertical growth (doing more and better in its four areas of activity: search, financial, games and e-commerce) rather than horizontal (trying to be all things to all people), by retaining existing customers as well as attracting new ones, and by growing revenues at an ever increasing pace.
The company has done two big roadshow stops recently, Payne Webber and Piper Jaffry (last Monday). When asked why, RCH replied “For my own personal pleasure,” which brought down the house. Kidding aside, the company feels the need to educate the big brokerages and institutions as to what GNET is, and will be. Currently only about 11% of the stock is in the hands of institutions. Both presentations were well received and there are more scheduled. Content is the key to building value.
Hypermart and Mercata are expected to contribute greatly, as they are high margin profit centers. Hypermart provides “end to end” service for small business and benefits from its “first to market” status.
Broadband offers great opportunity in the area of multiplayer games and adding multi media content to other areas.
John Kiester rose to refute the notion that “banner advertising revenue is approaching zero.” It now makes up 65% of GNET revenue. GNET will continue to prosper in this arena because of its ability to focus advertising in specific areas. Six sales offices are open in major ad markets and by year's end there will be ten.
The increase in total number of “authorized” shares was needed to enable future splits (including the one next Thursday) and provide flexibility, both in acquisitions and option incentives to quality employees. There is no dilution as a result of this authorization. The split will improve the float of our stock and present a more attractive “profile” to brokerages and institutions (“why follow a stock if we can't buy any?”) After the split GNET will have @ 42mm shares outstanding on a FULLY DILUTED basis, inclusive of options which have yet to be exercised.
The $200 lifetime SI membership is still available and use of a GNET related credit card will engender special rates on future services.
A question was asked on how earnings are reported (GNET will report in the 3rd week of July on an as yet undetermined day). Russ responded that it is confusing, but there are basically two ways of reporting and that GNET does both. “Pro Forma” earnings leave out extraordinary one-time charges, such as those associated with mergers, and are the accepted method by which internet companies are compared, by First Call and others. “General Accounting Practices” is the old fashioned system, which counts everything, and is available in the public record.
When asked if “management would stay the course,” Russ answered that
some feelers had been received, but that he believes the most exciting part of this business lies in the future and that he and his team are excited to meet those new challenges.
A stockholder proposed a round of appreciative applause for Russ and his team, whereupon the room “gave it up” with gusto. |
