VRIO .. A "Market Gem" I mentioned this a few times about 2 months ago but this IPO did not move much. Could be time for the second tier (or third?) internets to start gaining some ground.
Alan Braverman of Deutche Securities reiternated on CNBC a strong buy on VERIO along with Yahoo and AOL.
New York, Sept. 17 (Bloomberg) - Verio Inc., one of the fastest-growing Internet service providers, expects sharp revenue gains to continue followed by profitable operations around 2001, Chief Executive Officer Justin Jaschke said.
''The Internet is still in its infancy and businesses are just beginning to tap its power,'' Jaschke said. For Verio, that means it can sustain revenue growth ''in excess of 200 percent a year,'' he said, while it expands its network, signs up more customers and derives more service revenue.
''We expect to be at the $200-million revenue rate by the end of the year,'' Jaschke told the Bloomberg Forum. That would be a nearly sixfold leap over 1997.
Year over year, though, comparisons are difficult to make for the Englewood, Colorado-based company. Along with internal growth, Verio has made about 40 acquisitions, using its $127 million initial stock offering in May to raise cash to boost minority interests in smaller companies to 100-percent stakes.
Still ahead, Jaschke said, is the acquisition of Hiway Technologies Inc., a closely held company in Boca Raton, Florida that provides Internet sites to more than 150,000 businesses. The purchase, for $101 million and 8.67 million Verio shares, will close next quarter, he said.
Terms haven't been affected by the stock market's recent volatility, Jaschke said.
''There were no caps or collars with this deal,'' he said.
Adding Hiway also is intended to spur service revenue from businesses that let Verio ''host'' their Internet sites, priced from around $30 monthly, then handle their electronic commerce. Jaschke cited Powell's City of Books in Portland, Oregon, which put its site up on Verio.
''They're now a $1000-a-month customer,'' he said.
The goal is to use the company's connections and advanced network to derive an increasing chunk of profitable service revenue, said Jaschke, 40, a former chief operating officer of Nextel Communications Inc. and a cellular-phone industry veteran.
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Verio reported its second-quarter net loss widened to $26.3 million, or $1.44 a diluted share, from $8.1 million, or $7.28, on about 17 million fewer shares a year earlier. Revenue for the period ended June 30 more than tripled to $28.5 million from $8.2 million.
Jaschke said he anticipated operating earnings to begin around 2001. By mid-1999, he said, Verio should report positive earnings before payment of interest, taxes and depreciation. He didn't provide specific figures.
Meanwhile, Verio has some rich investors and powerful partners. NTT Corp., Japan's largest telecommunications company, invested $100 million. Verio also received a smaller investment from Brooks Fiber Inc., a fiber-optic carrier that's now part of MCI WorldCom Inc.
MCI WorldCom, which owns one of the world's biggest Internet backbones, ''is one of our biggest customers,'' Jaschke said.
Verio also has a $100 million, 15-year agreement to buy time on a high-speed network developed by Qwest Communications International Inc. Qwest doesn't have any equity interest in Verio, Jaschke said.
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