Sarkie,
The meeting was mostly a review of things that most people on this thread already know. Apparently ING's 2 internet analysts recently left for greener pastures so things might of been a little unorganized in terms of getting bodies in the room. There were probably about 20-25 people in the session with a lightly attended breakout session. I do not think there were any celebrity/big gun money managers in the room although I spent most of the time focused on a young, blond dutch girl who pretended she could not speak english when I tried to chat her up after the meeting. I hate it when that happens.
Russ went over the vertical market strategy most of you are familiar with. Of course, some of the bigger "everthing to everybody" portals have tried to move in this direction as well. He did mention the media metrix rankings and said that they are aiming to move up a couple of slots once the get they broadband initiatives in place. Don't look for them to go to #1 (except in indoor soccer) but they are aiming to move up a couple of notches from #9. Russ also broke out the organic (wallstreetspeak for internal) growth versus acquired growth. In any case they have showed the fastest growth of any top 10 property this year.
He did not address the current quarter as they are in the quiet period but they will likely report earnings in the third week of October. He went over the financials and their goals and reiterated that they are 1) operating income positive, 2) cash flow positive and 3) plan on expanding margins to the goals he outlined back in June. The one thing I would add is that Russ is very quick with all the numbers. He has them all in his head and spits the out in a machine gun like fashion. The man knows his stuff. He has studied all the models competitors have, etc and knows he has tremedous operating leverage in this model. He also reiterated that they plan to stick to the gross margin and operating margin goals he has previously laid out to investors.
He talked a little about Authorize.net and Dogpile. Authorize.net has almost 3 times as many merchant relationships as CyberCash which I guess is number two in this space and A.net is signing up new accounts at a very robust rate. He also gave a few reasons for the Dogpile acquisition and said that they are now 30x as large as the next player in the meta search space. He also said that this capability is crucial to them as the platform shifts to broadband.
He went over HyperMart and talked up their first mover advantage. This area is getting more competitive and people including MSFT are likely taking aim at them. HyperMart has already built an audience and along with the partnering they have done with Intershop (a european co much like OMKT) they are ready getting ready to rock and roll here. The recurring revenue streams they plan to realize here from e-commerce should be very important to the future of the company's success. IMO this must be monitored closely but they do have the lead at this time. The competition is gunning for them however. IMO execution here will be critical.
He reiterated that they think Playsite will become even more important as time goes on. It is "extra sticky" as users spend an average of about 40-50 minutes on the site and it should emerge as one of the first "killer apps" for broadband. No doubt other apps will emerge that do not exist yet. I would guess that we should look for some interesting partnering arrangements to be announced in the gaming space over the next few months.
----Whats Next for GNET?------
please insert "Safe Harbor" legalese here
-Look for them to extend their e-commerce strategy as it should account for about 50% of revenue in the not too distant future.
-More acquisitions and partnerships are likely
-continue with product development, relaunching
-Extend the marketing of Go2Net network
-Continue to capitalize on opportunites. For instance, only about 10% of all regular SI users are subscribers. There are a whole lotta lurkers out there!!! I would guess that they might try to tweak the SI model to optimize the revenue opportunity it presents.
AND MOST IMPORTANT IMO
-The Charter roadshow will soon be hitting a town near you. Well, at least if you live near NY, SF, Denver, Chicago etc. THEY WILL SOON FORMALIZE THE DETAILS OF THE BROADBAND JOINT VENTURE. This will likely give us a good read to the opportunities it presents.
I would guess that the Broadband model will keep intact the attractive business model they have outlined. These are quite attractive margins IMO, and we might soon be able to model in guesstimates as to what revenues could look like in the the year 2000, '01 etc. If you play with the numbers it can get quite compelling. Oh yeah, tell those nitwits at Forbes and Morgan Stanley that they have $270 million in cash or about $6.50 a share if my math is right. Which makes that $10 price target about as funny as some of Mary Meeker's recent advice. OK, I know she did not write that but that analyst did not even take a quick look at the company.
And finally, Russ stated that he has not or does not intend to buy a Gulfstream Jet, buy a 10,000 acre ranch in Montana, put in for vacation time or anything that would make us doubt his commitment to the task at hand. He is looking forward to moving into the next headquarters next spring where there will always be a fresh cup of coffee brewing somewhere.
NotsureifweshouldgolongcoffeefuturesNeiderhoffer
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