RRRR rec from the newsletter...FYI:
November 4, 1999
AXXel Knutson's Market Flash
Follow up # 2 on CMTN, CHD, MPPP, LPGL
VTAR?
["Volume Trade Analysis Research"?]
"Manage the risk?the profits will take care of themselves"
"In this business, being right is not as important as making money?consistently, and one of primary tenets of the quest is the avoidance of the 'obvious risk'"
From AXXel Knutson,
EVP & Director, Institutional Equity Research
Platinum Equities, Inc.
Member NASD & SIPC
80 Pine Street-32nd Fl-New York City 10005
Email: vtarmail@aol.com
Telephone: 800-696-9002 or 212-271-0075 FAX: 212-271-0092
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Trade and service marked by and owned by Axxel Knutson and is licensed to Platinum Equities, Inc. under revocable license. ¸ 1999 all rights reserved, Axxel Knutson
All of these stocks have given us some very interesting price movement?so here is some guidance:
Copper Mountain Networks [CMTN-87 + 16 from the follow up, off 3 since the original recommendation]: We continue to recommend purchase very strongly. Our price objective remains unchanged: an attack on the $135 high and we expect that the attack will be successful. The recent release of locked-up shares is of no importance to us whatever.
Church & Dwight [CHD-28.25] "?moved nicely from the $25 1/8 level and we soon expect an attack on the $30 level and we expect that the attack will be successful." 11/4/99: we have seen the $29 level and we continue to consolidate every move. No change. Positive and a purchase is still OK on dullness on these pullbacks.
MP3.com [MPPP- 64] "?exploded on our recommendation from the $38-39 level and we are still very committed to the purchase of this stock. The high of $50 yesterday is not close to our target for this company. Buy the pullbacks." 11/4/99: Well, a 66% move in about two weeks or so does it for me. Traders sell proceeds « to National Semiconductor [NSM-33 3/8] and « to Rare Medium [RRRR-15 5/8]
National Semiconductor [NSM-33 3/8] playing catch-up in the hot semiconductor group. We think it will "catch-up." A successful attack on the 36-38 range brings $50 into range. From here that is nearly a 50% return?that meets our objective and risk requirements. Buy.
* Chart is courtesy of R.W. Mansfield & Co.
Rare Medium [RRRR-15 5/8] This stock just reported earnings. There was some run-up in the stock just prior to the release [which follows] and a minor blast of $19+ and the selling on the news to the current level. We consider this price range the place to buy and so recommend. With its subsidiaries, develop Internet strategies, improve business processes and develop interactive content using Internet-based technologies. Clients include such companies as Pfizer, Microsoft, Scholastic Entertainment, Shiseido and Epson.
Sunday November 2, 04:44 PM Eastern time - Company Press Release
Rare Medium Group Reports Revenue Increase of 644% in Third Quarter
Revenue Increases 120% Quarter-to-Quarter; Company Invests $19.3 Million in Internet Ventures; Incubator Companies at 21 Million Quarterly User Sessions
NEW YORK, Nov. 2 /PRNewswire/ -- Rare Medium Group Inc. (NASDAQ: RRRR), a leading Internet enabler, providing consulting, Internet development, "ASP" services, and venture capital to next-generation Internet companies, today announced record revenue growth for the third quarter ended September 30, 1999. Revenues for the third quarter rose to 11.3 million, a 644 increase over the third quarter of 1998, and a 120 sequential increase over the previous quarter. The Company reported a loss before depreciation, amortization and other non-cash charges associated with the Company's convertible preferred securities for the third quarter of (0.10), which improved from (0.13) for the same period last year. This also represents a sequential quarter-to-quarter improvement compared to the equivalent second quarter loss of (0.16). The Company reported a net loss exclusive of non- cash charges of 3.5 million or (.09) per share related to the Company's preferred securities of 10.8 million or (0.28) per share for the third quarter of 1999, compared to a net loss of 7.6 million or (0.28) per share for the same period of the previous year.
Internet Solutions
The Internet solutions and e-commerce development arm of Rare Medium Group Inc., reported that the bulk of the sequential quarterly revenue increase of 120 was generated from offices that have been in operation since last year. Proforma revenue, including full quarter revenue from acquisitions and revenue from services provided to consolidated subsidiaries, reached 12.3 million during the third quarter. "The rapid revenue growth achieved in the third quarter, especially the organic growth, which was supported with the addition of 130 new colleagues and very low annualized turnover of 6, demonstrates the merits and acceptance of Rare Medium's dynamic and innovative offering in an explosive growth industry," commented Glenn S. Meyers, Rare Medium Group Inc.'s Chairman, President and CEO. "The combination of our Internet development, venture capital, and incubator company investments should produce unique and effective results for our clients, employees and shareholders. As we continue to grow our market and product offering, we expect to realize superior operating ratios."
Selected comparative operational metrics:
3Q99 2Q99
Billable Headcount 327 197
Billing Rate $200 $160
Annual Revenue per Billable Prof. (000's) $188 $168
Utilization 70% 75%
Gross Margin 51% 54%
Annual Voluntary Turnover 6% 4%
The small reduction in utilization and gross margin reflects the 66 percent ramp-up of billable professionals during the quarter. During the third quarter, the top ten major contract wins averaged 1.4 million compared to 1.0 million for the previous quarter. New clients include Intel, Ritz Carlton, Forbes, Lehman Brothers, Paine Webber, Wishclick.com, Macromedia and ZDTV.
Venture Investment
Rare Medium Group establishes strategic equity positions in dynamic, growing Internet companies whose vision and new business models can inspire positive change in the way people use the Internet today. The Venture investment focus is on Business-to-Business E-commerce, enabling tools, broadband, and next generation communications. The Company launched two new incubator companies and made venture investments in seven companies during the third quarter.
The Company staffs and operates its incubator businesses with the objective of building, leading companies within chosen segments of the Internet industry, for either private or public offering. The Company holds equity positions in the following concerns:
Effective
Company Description % Ownership*
Changemusic.com A digital music company providing 96%
(Incubator business) music news, information and content.
(Over 3 million user sessions per month)
iFace.com
(Incubator business) Voice-enabling the Internet with 80%
computer telephony solutions
LiveUniverse.com
(Incubator business) Resource for building, hosting, 100%
and developing web-based communities
(Over 1 million user sessions per month
and 500,000 registered users)
Regards.com
(Incubator business) Electronic greeting cards 90%
(Over 3 million user sessions per month)
AtomicPop.com All-digital record label and pop 33%
music lifestyle portal
Edmunds.com Automotive editorial and pricing content 4%
L90.com** Solutions for advertising, sponsorship, 6%
and brand development
iParty.com Resource for party planning, supplies 2%
and related services
SmartOnline.com Business information for small 1%
businesses and entrepreneurs
StreamSearch.com Directory and database of 21%
streaming media content
Speakout.com Online forum for exchange of ideas 7%
and information among the public,
the media and government officials
MoneyHunt.com Provides advice to America's leading 16%
entrepreneurs
goShip.com Expanding delivery options for 5%
e-commerce sites
Compacc.com Direct marketer of motorcycles, 25%
parts and accessories
* Includes issued options and warrants.
** L90.com has recently filed with the SEC to conduct an initial public
offering.
London Pacific Group [LPGL-24] "?moved very well off the $18 level to about $21 « and is giving up most of that move. That is to be expected and investors can use this opportunity to acquire additional exposure." 11/4/99: and that would have been a good idea. IT IS STILL a good idea. Buy all pullbacks. Continue "Strong Buy."
DISCLAIMER
Investment decisions should not be based solely on our proprietary indicators, which are intended as an adjunct to your additional analysis. Please accept these comments as market commentary. We do not intend these comments to replace detailed fundamental analysis. We urge you to accomplish that additional research via your contacts on the Internet or through a trusted financial advisor. If you want additional information, we will give it upon your request.
This report has been prepared from original sources and company data we believe to be reliable, but we make no representation as to its accuracy or completeness. Additional information is available upon request. This report is published solely for information purposes. It is not to be construed either as an offer to buy or sell or the solicitation of an offer to buy or sell any security or the provision of or an offer to provide investment services in any state where such an offer, solicitation or provision would be illegal. Any opinions expressed herein are statements of our judgement on this date and are subject to change without notice and we may not update that change to you. Platinum Equities, Inc., its affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold, or sell a position in the securities mentioned herein.
The author of this report, Axxel Knutson, does not invest in any of the securities mentioned in this report nor does his immediate family unless such securities are included in mutual funds or index options. Equity investment involves risk of capital loss. We recommend that your portfolio be diversified by company size, industry group, geographic region and by currency.
It should not be assumed that future selections will be profitable or will equal the performance of past selections. Securities listed herein illustrate selections made using proprietary indicators know as VTAR? [Volume Trade Analysis Research?]. These names, VTAR?, Trading Engine?, tradingengine.com?, Volume Trade Analysis Research?, are servicemarks/trademarks of AXXel Knutson and are given under revocable license to Platinum Equities, Inc. ¸ 1999, All rights reserved, Axxel Knutson and Platinum Equities, Inc. Diversify. Got it?
All recommendations and commentary are directed toward sophisticated, aggressive traders who have significant experience trading in a volatile market and who possess the financial resources to risk a loss of some or all of their invested funds. Commissions, and if you use margin, interest charges will lessen any return on investment. VTAR [Volume Trade Analysis Research] centers around the proprietary analysis of trading volume, price, general fundamental analysis, beta concerns, group rotation and detailed analysis of risk as it relates to entry and exit points in highly liquid stocks. Control the risk?the profits will take care of themselves? AXXel Knutson |
