Comments from Eric Dubin, the Tech Stalker from MSN Investor:
MySoftware: An Internet play with real earnings
Many of you have written to me about my purchase of MySoftware (MYSW). The stock has been under significant accumulation, and the most recent move dates back to Nov. 19, when the company announced it had hired an executive from The Polk Co.
Odds are, you haven't heard of The Polk Co. They are not publicly traded, but they have been in business for more than a century and are a well-respected provider of business intelligence. An overview of Polk is available on its Web site. The executive coming aboard will serve as vice president of Business Development for MySoftware's Internet Data Group. Investors took this as one more confirmation that MySoftware's management is highly focused on developing its Internet-related business -- hence, the accumulation.
MySoftware's core business centers around low-priced business productivity software. The company has been in business for more than 10 years, serving a small, but growing, niche market. In recent years, the firm ran into trouble. Its software wasn't very high in quality and sales stagnated. A new management team was brought in this year and, as the last two quarterly reports attest, the company clearly is turning around.
The company has a low profile on Wall Street. Even though management has attended such notable technology industry conferences as the American Electronics Association's "AEA Classic," arguably one of the most influential tech-focused portfolio manager gatherings around, only one analyst officially covers the stock. No surprise; the company is tiny, a "microcap," as Wall Street folks call them. But the risk associated with this small company is well worth the reward potential -- hence, my overweight initiating position of 1,000 shares at 6 5/8.
The company unveiled one of its newest Internet services on Monday -- Myprospects.com. I have used the beta site and I'm impressed with the business model and profit potential MyProspects.com represents. Direct marketers pay a pretty penny to obtain target demographic data. Having an easily accessible Internet-hosted application is pretty compelling.
Both The Polk Co. and Experian, a unit of Great Universal Stores PLC, are working with MySoftware, delivering the demographic and business intelligence data for the MyProspects.com service. Experian and Polk will also promote a private-label version of MyProspects.com for corporate accounts.
I believe MyProspects.com will contribute profits to the company quickly, unlike most Internet business models. In fact, this site, combined with the company's clear effort to build a more synergistic distribution channel for the traditional software products, leads me to conclude the turnaround momentum is far from over.
I don't buy Internet stocks merely for the sake of owning Internet stocks. But I find this company's overall strategy compelling. I view the Tech Stalker's holding as a speculative position, exposure I'm willing to extend for a portion of my portfolio. I believe the stock has the potential to run well past $25 in 1999, even though the shares likely will be extremely volatile. The orders I have entered today are designed both to benefit from what I think will be the near-term trading range, as well as to set forth part of my winding-down strategy for getting out....
• Place order to buy MySoftware (MYSW), 150 shares at 10. If this order executes, enter an order to sell 150 shares at 15. Also, regardless of any additional purchase, enter an order to sell 300 shares at 20 3/4. All orders are good until canceled.
Article edited to focus on MYSW |
