get ready for more volume on this baby--a la cramer
If your company's Intranet has become 'mission critical,' chances are the engine that makes it run is Livelink, a product of Waterloo, Ontario-based Opentext.
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View from the North: The Intranets' Little Secret
By Bob Beaty
Special to TheStreet.com
7/7/98 4:25 PM ET
As you read this, Yahoo (YHOO:Nasdaq) has flown over, and back under, the $200-per-share mark. And with projected 1999 earnings looking to come in around 74 cents per share, the Internet search engine's multiple comes in at a scant 270 times earnings. But I guess it's not about earnings...
Of course, lots of people use Yahoo for their leisure time or email. But if you work for a large company where your intranet has become "mission critical" to planning collaboration, chances are the engine that makes it run is Livelink, a product of Waterloo, Ontario-based Opentext (OTEXF:Nasdaq). Livelink, very simply, is a document-management system that pulls a company's secure, Web-based, online assets together to increase productivity and, ultimately, profitability.
An example for your edification: Before it used Livelink to manage its corporate intranet, AT&T Wireless had document management and project collaboration in name only. Because no one used it, it didn't take a Harvard MBA to figure out that this approach was actually costing AT&T Wireless lots of money. Once Livelink came onboard as the document manager for its intranet, AT&T Wireless realized impressive improved productivity figures: on a three-year investment of $321,000, AT&T Wireless calculated that (after a payback period lasting less than six months) it saved $4.5 million in previously lost productivity. Simple math shows that the use of Livelink was not only good management, but an investment in improved productivity -- with a 684% return on investment. And there are 2.5 million users at 3,400 other corporations in 31 countries who have had similar experiences (in varying degrees) since their intranets got the Livelink treatment.
Seeking to build its market presence, Opentext on June 3 acquired U.S. private document management vendor Information Dimensions from Gores Technology Group. Not only does that allow Opentext to take the market lead with a 48% share of the intranet document management market, it allows Information Dimensions to brings its Basis line of library and document management products into Opentext. The complement is that Opentext's Livelink is now better suited to project collaboration and intranet management. Information Dimensions also brings a high-profile European presence to the table, given that it has traditionally taken in half of its 1997 revenues of $20 million (all figures in U.S. dollars) there. The combined entity will have nearly 600 employees and customers in 31 countries. As it digests Information Dimensions and morphs the Basis product to address both companies' markets, the company should strengthen its dominance of its sector.
Opentext has been in the document-management business since 1988. Of the nine acquisitions it has made over the last decade, all nine CEO's are still with the company. That won't necessarily make you any money, but it's an interesting, un-Chainsaw Al-like stat.
Due to the fact that Opentext has a search engine at its core, the company is often, albeit wrongly, compared to its higher profile "peers" -- Yahoo, Lycos (LCOS:Nasdaq) et al. Unlike many in this group, however, the company actually makes money: For 1999, First Call estimates the company will earn 64 cents a share, making the current price a palatable 20 times forward earnings. Yet Opentext's stock price peaked at $23 in January, and has settled back to the area of $13 recently. With 17 million shares outstanding, the market cap is $221 million. (Yahoo's is pushing $10 billion. Yowza.)
Opentext's client list is populated by companies such as AT&T (T:NYSE), Ford (F:NYSE) and Nissan Credit, among others, and Information Dimensions brings 500 of the largest 2,000 international companies to the partnership. (A full list is available at the company's Web site, www.opentext.com. While you're there, check out the Livelink Pinstripe product -- a business-only Web search engine)
A year ago, Opentext had an installed base of 60,000 users. Even then, IDC rated Opentext the market leader in Web-enabled document-management systems. Today, over half a million users have made Livelink part of their corporate routine.
If it's value you crave, there's value in Opentext. And for U.S. users, don't worry that Livelink is Canadian: It also comes in 13 other languages. |
