USB Piper Jaffray Strong Buy Reiteration
nother strong buy reiteration...here are some excerpts from the report dated
1/28/00:
(Found at Multex:
yahoo.multexinvestor.com
"Yet Another Very Strong Quarter; Software Division Continues To Establish Its
Leadership And New E-Business Division Is Poised For Success; Revising
Estimates To Reflect Revenue Upside And Increased Investment For E-Business
Strategy; Reiterate Strong Buy"
Reorganization Into Two Divisions Will Accelerate Penetration Into New B2B
Vertical Markets.
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Digital River announced
yesterday that it will reorganize internally into two divisions: 1) Software and Digital
Commerce Services, which includes the
Company?s core business of e-commerce outsourcing services for software
publishers and retailers, and 2) E-Business Services which
will focus on expanding the e-commerce solution platform to manufacturers,
distributors, and retailers for sell-side activities. We
view this development as an extremely significant and positive move on the part of
company management to accelerate penetration
of Digital River?s unique platform across multiple vertical markets.
Management has indicated an aggressive build out strategy, targeting a tripling to
quadrupling of sales personnel dedicated to new
customer acquisitions over the next six months, with equally aggressive goals on
the marketing and operations side, spending an
estimated $18 million to $20 million over 1999 levels to invest in growth. The
Company has identified its ?sweet spot? and will
focus sales efforts on companies with more than $500 million in revenues and
select strategic clients. In addition, the Company will
launch new services and applications designed to deepen and distribute existing
functionality to its customers providing them
maximum flexibility and control. These features will be focused on both B2B and
B2C e-commerce needs as the Company is
experiencing strong demand in both broad sectors. These initiatives, combined with
a track record for aggressive yet disciplined
growth, have the potential to generate tremendous upside to our estimates,
particularly in the second half of 2000 and beyond.
Summary
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Digital River has clearly demonstrated the success and viability of its e-commerce
software distribution network. This division will
continue to see strong growth as it expands its leadership and realizes the inherent
benefits of more Web use and download activity.
This division has also provided the platform to address the even larger opportunity
for e-commerce outsourcing to other vertical
industries. Given the Company?s demonstrated success in the Software business
we are very optimistic about the potential for the E-Business
division and we anxiously await the progress with the build-out of this new group
with the much needed investment that it
will be making. On a valuation basis, Digital River continues to trade at a substantial
discount (1/4 to less than 1/10) to other leading
e-commerce infrastructure and enabling providers (e.g. USIX, SCNT, VIAN, CYBS
[#], BVSN[#]). As the Company executes on the
E-Business strategy we look for significant multiple expansion in value of Digital
River shares.
SMM |
