>Someone post the highlights of the CNBC interview please.
here's the transcript. you can also catch the aud & vid here:
Open Market (OMKT) CEO Gary Eichhorn cites studies that place the company's market share at 30%
mktnews.nasdaq.com\\www\nasdaq\news\msnbc\1998\12\1\NASDAQ_0910_16509.htm&usymbol=OMKT&logo=True&companyname=Open+Market%2C+Inc%2E
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CNBC-SQUAWK BOX
OPEN MARKET CEO GARY EICHHORN
DECEMBER 1, 1998
ABSTRACT: Eichhorn says the stock will stop trading erratically when it starts trading on fundamentals. Eichhorn sees big entrants to the marketplace as working towards the common goal of solutions for the customer rather than fierce competition. Eichhorn hopes his company is profitable in 1999 if market conditions remain steady.
Ron: The stock market took a dive yesterday and some of the recently resilient Internet stocks followed suit, actually led the market lower. One of those was Internet-commerce software maker, Open Market. Shares tumbled over 3 points to close at 17 1/4. However, that's still up 325% from a closing low of 4 1/4. In addition to publishing software, Open Market develops software that allows companies to engage in secure transactions. The company has also been beefing up its operations to better serve big-name customers such as Time Warner, Disney, and AT&T. But can Open Market hold its own, in a market attracting giants such as Microsoft and Oracle? Joining us from Boston to talk about that and his company is Gary Eichhorn, CEO at Open Market. Good morning, sir. Thanks for being with us today.
It's a pleasure to be here, thank you.
Ron: Let me ask you to respond to the question we put in the introduction. Can you maintain your market share and vibrancy when some other big players will be getting into this end of the business?
Well, actually we see the big players as being important on entrance into the business. Clearly one of the things that's happened recently is that more and more people are talking about Internet commerce and recognizing how big a market it's going to be. But the big players have an important role to play in building the foundation software for Internet commerce. People you mentioned like Oracle, like Microsoft, like Sun Microsystems. Our application software works on top of their foundation software and basically completes the functionality that's required to do these large-scale mission critical secure transactions. So, we view these companies much more as partners and complementary to our strategy than as competitors. And I believe they view us the same way, as an important part of the overall solution for their customers.
Ron: Now, given that you again, as you say, you know, will be layered on top of foundation software, what is to keep a larger company from simply buying you out?
Well, there's nothing that can keep any company from being bought out at the right price, but I think basically the issue that they need to deal with, as we all do, is focus. Right now we have 400 people that are all focusing on building transaction software for Internet commerce. That, even in a large company, is a fairly significant number of people. And I think they need to deal with making sure they're competitive in the areas they've chosen. It's always difficult to move, even as a large company, into areas that are highly specialized like our area. So generally these companies would much rather partner with us as a strong independent, continue to do what they do well and have us continue do what we do well.
Erik: Mr. Eichhorn, it's Erik Gustafson. Your stock has been all over the place this year from 10 at the start of the year to 30 down to 4 and now the latest Internet mania has gone back up again. Can you give us some sense of the fundamental growth of your business, what type of market share you have, talk about some revenue growth and when you might make some money?
Yeah. Obviously, this is a very early stage market. I think one of the reasons the stock has been moving around is, you know, it's still highly speculative I think for investors to try to pick who the winners and losers are. And that changes based on kind of the latest information coming out of places like government studies, you know, people's feelings about whether commerce is going take off, et cetera. I think the recent run-up in the stock and other stocks in our segment has been based on the recognition of the fact this Internet commerce business is, in fact, going to be huge. I think the question is going to be when. That's why you see a lot of these broad swings in our stock and in other stocks in the sector.
Erik: What are you looking for as far as revenue growth and what's your current market share? And how about when you're going to make some money?
Right. As far as market share is concerned, the first market share data that's actually been collected in the segment, it's so new the data really isn't generally available, was by DataQuest. They just did a study recently and pegged our market share at almost 30%, 29.5%. And the next nearest competitor in the software business was at 8%, which gives us a significant lead, obviously, in a very small and early market, but certainly a good sign. We don't predict our revenue growth for the company as a policy going forward. But if the market trends continue and we start to see some real pickup, not only in the retail sector, which you're starting to see now, but also in the large industrial sector as well as in the service provider sector getting small and midsize businesses online. Then obviously this could be a very, very large market. Forester is predicting that by the year 2002, the market for Internet commerce software could be over $3.8 billion. With an explosive growth from the market today I think they pegged it about $200 million. There's no way to know whether that's going to materialize or not, but obviously the indications we see today are that more and more people recognize that it's essential for them to be on the Internet and doing commerce and making that an integral part of their business strategy.
Ron: You said a moment ago one of the difficult things right now is identifying accurately the winners and losers ultimately in the Internet world.
Right.
Ron: Why should your investors believe that you'll be one of the winners?
Well, what I like to look at is, you know, take the hype and the hysteria away from it and look at fundamentals. I think eventually, every company starts trading on fundamentals eventually. The things that I would look at for our company are, number 1, do we have a technology advantage, which is sustainable? And the answer there is yes, both in terms in the uniqueness of our architecture and our approach and our patented technology that we base our applications on. The second thing is does the company have real customers and real revenues? Again, in this particular case the answer is yes. Open Market has more Internet commerce, customers than anyone else, is doing more robust applications on Web. Some readers might have seen "The Wall Street Journal" yesterday where Sun announced their alliance with Netscape and AOL. And in their ad they named their Internet commerce top customer, interesting to note that 6 out of 10 of the customers are Open Market customers running on the Sun platform.
Ron: In additional to your real revenues, you have real losses as well though, right?
We do, we have purposely chosen a path for investing ahead of revenue to make sure that we have the critical mass and the application so when market took off, we'd be ready and we'd be in an excellent position. I think that's exactly what we've done. We were able to raise money through the public offering that we did in May of 1996, very specifically for this purpose. And basically as the market continues to grow and our losses continue to narrow, we'll be in a position to be profitable. We certainly hope in 1999, we will be profitable, if market conditions continue to move the way they are today. And more importantly, we'll be positioned in extremely strong place, because of our investments in R&D and in channels. We're now doing business in 21 countries around the world. And you've got to be a worldwide player to be a winner in the Internet commerce business.
Ron: Mr. Eichhorn, thanks for coming on. Appreciate your time.
It's a pleasure. Thank you.
Ron: That was Gary Eichhorn, CEO at Open Market. |
