Hi Kemble! This week, Dell joined in the rally! Buying Dell is a "no-brainer" too! By the way, I recommended a Dell Computer to one of my affiliates and his wife! They bought the Dell and they are happy customers! I think he will recommend Dell to his associates now, and he is about to close on two more radio stations, so he will buy more Dell's as well! :)Leigh
First, business computing systems expert Dell Computer (Nasdaq: DELL) announced that it would jump into the SMB Web hosting game through its www.dellhost.com website. The move didn't get much play on the Street or anywhere else, likely because business hosting seemed like a no-brainer area for Dell to get into as part of its plan to build "beyond the box" revenue streams by offering Internet-centric services to businesses.
fool.com
New Competitive Scenario for Verio?
By Brian Graney (TMF Panic)
March 2, 2000
Small and medium-sized business (SMB) Web hosting and services firm Verio (Nasdaq: VRIO) turned in its Q4 financial results this morning, giving investors who are tracking the four-year-old company's progress a fresh batch of numbers to digest.
The company's quarterly loss rolled in at $0.71 per share, which was steeper than last year's loss of $0.51 per share but not quite as bad as the loss of $0.76 per share expected by analysts surveyed by First Call. However, revenues came in at an even $73 million, up a mere 7% sequentially. While not terrible, those numbers were far from the "upside surprise" variety relished by investors and analysts. As a result, Verio's stock, which had risen 73% year-to-date, fell back some 15% this morning.
Over the past year, Verio has been adjusting its business model to focus on opportunities in Web hosting and related value-added SMB services while de-emphasizing its roots as a Tier 1 backbone access provider. These new business drivers performed pretty well in Q4, with dedicated hosting revenues rising 48% sequentially and co-location revenues marching up 34%. As far as the revenue mix, these "enhanced and other" revenues, as the firm refers to them, accounted for 56% of total Q4 revenues, up from 38% last year. All told, the company currently hosts 340,000 business websites, up 11% from last quarter's total.
Finding demand for these services hasn't been too much of a challenge as Verio is playing into a market segment that appears to be well underserved. That's a double-edged sword, however. On the one hand, investors can expect the company to continue growing its main adoption metrics such as hosted website count and enhanced services revenues at a healthy clip over the foreseeable future. But from a less-rosy point of view, the business opportunity being targeted by Verio is drawing in some well-funded new competitors. In fact, the competitive landscape received a good tilling just last week from a pair of sizable tractors.
First, business computing systems expert Dell Computer (Nasdaq: DELL) announced that it would jump into the SMB Web hosting game through its www.dellhost.com website. The move didn't get much play on the Street or anywhere else, likely because business hosting seemed like a no-brainer area for Dell to get into as part of its plan to build "beyond the box" revenue streams by offering Internet-centric services to businesses. Later in the week, computing services outsourcer EDS (NYSE: EDS) also figured it was high-time to stake its own claim to a portion of the business hosting prairie. For EDS, this maneuver has the additional aim of providing the firm with an initial foothold in the related e-business Wild West that is today's application services provider (ASP) market.
The dual announcements should probably not be viewed as a direct threat to Verio's existing business, considering the SMB services is still a rather fragmented market place and there seems to be more than enough business opportunity for many competitors. Still, the arrival of Dell and EDS on the scene calls into question the "high barriers to entry" argument that many analysts consider the central competitive advantage foundation supporting the $5 billion-plus Verio house. In time, the firm's scale and position as a first-mover in the SMB marketplace may indeed prove to be an advantage that is not only defensible but highly lucrative as well. But investors committing capital to Verio at this point in the story have good reason to be looking over their shoulders.
Related Link:
StockTalk, 10/11/99: Verio |
