INIT LOngers - Response from Herb
by: satrah 3/31/00 12:14 pm
Msg: 46744 of 46750
I mentioned a few days back that I wrote an e-mail to Herb and he responded as expected. Though I feel that I should have sold when the stock started sliding down from 55, at various level, it is too late now to disect this. But if you can wait for another quarter we may be able to see the 50s again. You can see Herb's response and my e-mail to him:
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Thanks very much for your suggestions and interest.
I have reviewed your suggestions and we are in the process of implementing almost every one of them - they are all right on target. I think that Interliant is an exceptional company and am glad that you share this opinion.
Best regards,
Herb
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I have been an investor/shareholder of Interliant for the past 8 months or
so. I started investing in your company's stock since the IPO. I am very
happy to find that a seasoned CEO like yourself is running the company now.
I am outlining some of my thoughts for your review.
Valuation:
Company Revenue (4X of Q4) Valuation Valuation/Revenue Ratio
INIT $76M $1.51B 19.9
USIX $60M $4.43B 73.8
ISLD $30M $4.91B 163.7
DIGX $87M $10.91B 125.4
VRIO $292M $3.97B 13.6
EXDS $405M $28.6B 70.6
Based on the valuation and the valuation/Revenue ratio, INIT is highly
undervalued. I feel the following steps need to be taken:
* I do not know how far it is true regarding ML and INIT having some issues.
It has to be worked out and the new analyst (who replaced Blodget) should be
brought to speed with respect to the new customer base, product offerings,
growth rate and other comparable companies in the same space. He can
re-evaluate the valuation all together and come up with the reasonable
upgrade with good price targets, unlike last time when ML initiated the
target of $25 when INIT was trading at $22 or so.
* INIT has to sign in some Marquee customers, like EBAY, etc., This will
bring in more confidence in institutions that INIT is not simply signing up
thousands of individual accounts that will not generate reasonable revenue,
but actually going after bigger accounts for considerable revenue
generation. Any solid alliances and partnerships will also help a great
deal.
* There should be some revenue related numbers given to the analysts
related to MSFT, BCMS, DELL, ONYX, VRSN and NSOL deals that have been
announced earlier. This will enable them to come up with their revised
projections and upgrade the stock to much higher target and also pursue in
institutional buying of INIT's stock.
* PR and IR need to have a good rapport and understanding with the analysts
and the institutions. Otherwise, even good news announcements go unnoticed
and/or not rewarded properly. Your news announcements should be transmitted
to all news wires. I do not see most of the announcements on CBS
Marketwatch, etc.,
* As a CEO, you need to go on the road show like you are underwriting this
stock, to re-sell the company once again to compensate for the poor selling
job that has been done. As there is some bad blood (based on ML rumor), you
may have to spearhead the PR campaign yourself.
* There should be an aggressive PR campaign to establish and underscore the
strengths of INIT as a leading ASP and buy in the confidence of the
institutional investment community in general. Something like redoing the
whole offering all over again. The under-valuation of INIT has to be
reemphasized.
Herb, you may be embarking on all these items and more, already. But as a
shareholder, I thought I should point out.
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