ROWE . . . very interesting
Also, thanks Kim and thread, u all have brought an Old SIer back.
IS this company turning into a b2b and increasing revenue from 25-30 mill annually to 600 mill.
Please note the repeated pennant/flags TA are what got my notice. But the news and strong buy rec made me buy.
Wall Street Journal Interactive, November 17, 1999
<ROWECOM CLOSE TO MAKING ACQUISITIONS, DISTRIBUTION DEALS >>>>>
By Peter Loftus
NEW YORK -- RoweCom Inc. (ROWE), which uses the Internet to manage corporate magazine subscriptions, is close to completing some distribution deals and acquisitions, its chairman said.
Richard Rowe, chairman and founder of the Cambridge, Mass., concern, told Dow Jones Newswires he expects to announce "two or three" distribution deals or acquisitions by Dec. 31. The goal of these deals is to expand the company's customer base and content offerings and to reduce costs.
RoweCom also plans to make an early foray into consumer-oriented services. It will soon announce a partnership with the public library system of a large city, under which patrons will be offered magazine subscriptions at the same discount rate the library receives, Rowe said.
RoweCom already has made three acquisitions since its intitial public offering in March. The biggest was the October purchase of Dawson Information Services Group from United Kingdom-based Dawson Holdings PLC (U.DHD) for about $56 million in cash and stock. RoweCom expects the acquisition to add about $350 million in annual revenue.
Besides acquisitions, RoweCom has turned to distribution partnerships to build its customer base, which numbers around 20,000. Under a deal struck in June, RoweCom's service will be distributed to customers of the joint venture between Sun Microsystems Inc. (SUNW) and America Online Inc.'s (AOL) Netscape unit.
The pending distribution deals and acquisitions will help RoweCom continue to rise above being a mere subscription management agency. Rowe prefers to call his company a "knowledge-mediary."
The firm offers access and subscriptions to about eight million books, 200,000 periodicals, several thousand newspapers and newsletters and about 5,000 electronic journals. RoweCom also lets customers search through about 12 million articles. About half of its customers are businesses and the rest are non-profit organizations, including academic and public libraries.
Using the Internet, RoweCom tries to eliminate all the paperwork that traditionally accompanied ordering and renewing magazine subscriptions. It operates a "Knowledge Store" Web site that allows authorized employees of RoweCom's customers to order and pay for publications from their desktops. One of the aims of RoweCom's acquisition strategy is to increase its content offerings.
"We want to give people a reason to go to the Knowledge Store every day," Rowe said.
In addition to saving its customers time and money, RoweCom itself cuts costs by using the Internet. Before founding RoweCom, Rowe headed Faxon Co., an offline subscription management firm that was later sold to Dawson. Faxon used to operate leased phone lines to field customer orders, which cost about $2 million a year. Using the Internet eliminates that cost, Rowe said.
RoweCom's use of the Internet also has reduced its cost of handling transactions. It pays Bank One Corp. (ONE) about 25 cents per transaction to make sure a payment is delivered from a customer's bank to the publisher's bank. At Faxon, the per-transaction cost was about 10 times that, Rowe said.
In its third quarter ended Sept. 30, RoweCom reported a loss of $6.3 million, or 62 cents a share, on revenue of $9.5 million. While RoweCom will continue to post quarterly losses, Rowe said he is comfortable with analysts' estimates that the company's yearly revenue will rise to between $550 million and $600 million in 2000, reflecting the Dawson acquisition. |
