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Technology Stocks : Net Perceptions, Inc. (NETP)
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To: rupert1 who wrote (2791)8/24/2000 3:04:07 PM
From: rupert1  Read Replies (2) of 2908
 
Today on radiowallstreet.com "Hidden Assets" the lead story was NETP. The analyst has it in his top 10 of 70 he covers.

He was very enthusiastic. He continually expressed amazement that NETP was selling so cheaply. This is how it went in note form:

- NETP has fallen below the radar screen;

- it does not have high visiblity:

- it's location in Minnesotta means it does not get Silicon Valley notice:

- some uninformed investors associate it with dot-coms running out of money: but it has only 24% of revenues from dot.coms:

- it has $115 cash with a burn rate of about $1 million a month, it could survive for 7 years if it never made a profit:

- it's growing month on month by between 30-50%:

- extract the cash and the business is being valued at $175 million which is ridiculously cheap:

EPNY is valued at $3 billion (or $2.5 billion minus its cash) even though its revenues are only twice NETP's size:

- NETP should be selling right now in the $30-40 range and could be justified in the $55 range compared with EPNY - with twice the revenues of NETP, EPNY has 15 times the valuation:

- NETP used to be a growth story it is now a value story, too:

- expect $58 million in revenues in 2000 and $130 million in 2001; this means it is selling at 3 x 2000 and 1.5 x 2001:

- it will be profitable in mid 2000 and after that will grow 40-50% per annum:

-its software margins are 80% so it will become extremely profitable because its costs will not grow at the rate of its revenues:

- it has best of breed technology, many applications, including e-commerce, marketing campaigns, knowledge management: it is not a competitor with the likes of EPNY - they serve different parts of the market - the latter has a platform and some personalisation offerings but NETP has the technology:

- in 2 or 3 years it will easily return over 1,000% - who knows how big it will become in ten years if it survives as an independent company:

- it will not go down from here - it is too strong a value play:

- when asked why Vulcan Ventures was selling, who was the smart man here the little investors or the big guys selling at $11, he said that Vulcan Ventures has hundreds of investments in start-ups and possibly needs cash - but he does not think they are actually selling they have filed to sell: in any case there is no fundamental reason to sell - selling has nothing to do with NETP: he cannot find the weakness in the comapny:

(My comments: he presented the case we longs present enthusiastically and with a note of disbelief that the market has been so blind: he is wrong about Vulcan Ventures not selling - but right about the disconnect between that and the fundamentals. Notice that he attributes weakness to PR - it not being known or understood.)
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