Just received this from a relative who is a salesperson with USIX.
It should answer some of the questions posed on this board.
Bullitt
To: USI Worldwide
> From: Andy Stern
> Subj.: USIX Stock Performance
>
> As shareholders, we all share an interest and concern over our
> recent stock performance. Despite reporting a very strong 2nd quarter,
> the stock has continued to decline. While no one can really explain the
> vagaries of the capital markets, we do seem to be hearing several key
> themes affecting our stock.
>
> * General negative press on the industry. There have been a number of
> skeptical articles about the ASP industry lately. Most have argued that
> the value proposition only makes sense for small enterprises, and that
> fewer of them are engaging ASPs than were expected. The recent failure of
> Pandesic and Ebase have heightened these concerns. Our own experience, of
> course, is to the contrary. Our Fortune 1000 clients find plenty of value
> in our product offering, and penetration is increasing. We're different
> in this regard than most of the so-called "ASPs" that have sprung up in
> the past few years, but with 1,500 "ASPs" out there, the markets are
> getting confused. USi's success over the past few quarters demonstrates
> that we continue to be the leader in a growing ASP market. We will
> continue to demonstrate our differentiation to the investor community.
>
> * VC overhang and VC distributions. Our Venture Investors agreed to a
> staggered lock-up when we did the secondary in February. That is, they
> agreed to a slow release of their shares over 8 months, starting in June.
> That was good news when we did the secondary (showed commitment), but now
> some investors are worried that the market will be flooded as the lock-up
> comes off. Several of our investors have made SEC filings disclosing that
> they were distributing some of their shares, no longer subject to lock-up,
> to their limited partners. This doesn't necessarily mean that their
> limiteds are selling, but some investors are worried by these
> announcements.
>
> * Investor focus on profitability and cash flow. Investors are much
> more focused on profitability today than at any time in the past three
> years. You can see this most dramatically in the B2C stocks. We're being
> penalized because, while our margin is improving, investors are not yet
> convinced our model will scale and our projected EPS breakeven is well
> beyond their typical 2 quarters outlook. This combined with recent press
> articles has raised investor concern about "dot.com" cash positions, and
> we've been on a couple of the lists. We've spent a lot of time assuring
> investors that we do not have a cash problem (we don't), but this may be
> contributing to our doldrums. The recent commitment we've received for
> $175 million of credit should have put any investor cash concern to rest.
> Now we need to focus on accelerating our breakeven.
>
> * The NASDAQ is down. NASDAQ was above 5000 when we hit our high in
> March. It's below 4000 today. Our stock has a high beta, which means it
> always swings more than the NASDAQ as a whole*up and down; it was up more
> in March, it's down more now. Moreover, the overall market volatility is
> making investors skittish. It's almost as if they are looking for reasons
> to sell, heightening the impact of the issues above.
>
> So what can we do? Dave Miller and his team have been working
> overtime to keep our investors informed of the real ASP story. As the
> investor community returns from its summer vacation, we're going to get
> out on the road and spend more time with them. We're going to demonstrate
> our penetration of Fortune 1000 clients; and we're going to show them how
> the recent organization and process changes we've made can get us to
> breakeven faster than they think. However, achieving our plan and posting
> great results is what will really turn our stock around.
>
> Here is the important message. We are seeing great marketplace
> success. Our value proposition is being adopted by major brand name
> companies in the mainstream economy. We are not running out of cash. We
> are growing our business and our capabilities at a blistering rate. We do
> need to listen to Wall Street's concern, and make sure that we are
> capitalizing on the opportunities for scale in our business. We can do
> this by constantly improving our processes, learning from our experience,
> productizing our infrastructure and routinizing our offerings, and driving
> our unit costs down and our quality up. The stock market is fickle, but
> it always catches up. As our success proves the validity of our model,
> our stock price will come along. We are all in this for the long term.
> We are creating an industry and building the dominant participant. We are
> realizing fantastic success, and we are just getting going. I appreciate
> each of the contributions you have made, and am confident that we will
> continue to build a great, profitable company with a stock price to match.
>
> Andy
>
> <<USIX Stock Performance 8-15-00.doc>>
> |
