Brk,
First let me disclose my positions... I sold my FWHT in Jan (to take short term capital gains in 2002 instead of 2001) around $5. I just bought back in yesterday at $2.80. I sold not because I dont like the company's long term prospects anymore, but because I dont like them AS MUCH as I once did. Overture has taken more of the pie than I expected, and that has put a damper on Findwhat's growth.
That said, let me answer your question: How does FWHT fit into the big picture? As far as I am concerned, they have lost the ballgame when it comes to securing big contracts with big players who require super-strict relevancy. AOL, Yahoo, and the others will keep turning to Overture for their sponsored links. However, many people assume this is all that matters. It isnt. An enormous amount of clickthroughs come from the smaller affiliate websites using the FWHT search box... mom and pop sites, homepages, small companies and search engines, etc. FWHT can continue to grow in this area as the overall web continues to expand its global footprint. If you look at the bottom line, which I keep pointing out is all that matters, FWHT continues to be more and more profitable largely through doing business with these smaller players. As earnings rise, so will the stock. I am now thinking more modestly...maybe a price of $6 to $8 by the end of this year. I think there will be a short-term pop after this quarter's earnings in a couple weeks when people realize it is still a growing and profitable company, despite the lack of big contracts. The other notable way FWHT fits into the picture is that they are also the most appealing takeover target for YHOO or any other "big guy" who wants to run their own system. Especially at the recently depressed price, Yahoo or AOL could acquire them at a bargain price at mold them to their needs.
There is another segment of this PPC search engine market that is often overlooked... the even smaller third-tier players behind OVER and FWHT. Companies like Kanoodle. None of them are publicly traded (to the best of my knowledge, except Sprinks, which is part of a larger company that is traded), but they are still doing quite well. They tend to cater to mostly adult and lower-quality traffic as their relevancy requirements are much less stringent, but nonetheless they are important to the overall picture because they also may be taken over at some point by the "big guys" in a private deal.
Thoughts? |
