Let's clarify who's backing OMKT and why:
No need to speculate with junk science from YHOO posters. Here's what we need to know:
Source: PaineWebber Research Report on OMKT, August 7, 1998, James R. Preissler, Internet Analyst; Richard Y. Choe, Research Associate. Contents (c) 1998, PaineWebber. ("Thank you, PaineWebber.")
(BAM Note: This report is most recent PaineWebber research available online and is highlighted on SI for discussion purposes only. Analyst's views and rating can change at any time. *Do not rely on this research to make an investment decision.*)
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Highlights from the PaineWebber report (as written):
--On June 4 [1998], Intel had bought 330,000 restricted OMKT shares valued at approximately $5 million...We believe this investment is a key win for Open Market in establishing its electronic commerce provider position, which is reinforced by its blue chip customer base.
--Open Market announced it has received a $20 million private placement from CMG Information Services [now CMGI, Inc.] (CMGI) and Heights Capital Management. With the investment, Open Market has approximately $43 million in cash, which we believe should be sufficient to fund its operations going forward...We believe this private placement reinforces the ongoing cooperation between CMGI, its portfolio of companies and Open Market. GeoCities, a CMGI affiliated company, has a deal with Open Market and Internet Commerce Services Corp. (ICOMS). In addition, on July 13, NaviSite, another CMGI unit, agreed to use Open Market's Transact software. On July 20, CMGI's Engage Technologies and Accipter announced an integration of their technologies into Open Market's products. Not only does the investment validate Open Market's technology by a significant customer, we would expect to see continued partnerships between Open Market and CMGI's holdings. Heights Capital management participates in equity financing for emerging growth companies. We believe this private placement, the investment by Intel, and a strong customer base lend strong support for Open Market's product leadership in electronic commerce.
Some terms of the $20 million deal:
--1,338,912 shares at $14.94 per share of OMKT were exchanged for cash.
--Additionally, 334,728 warrants were issued at an exercise price of $16.43 per share, which upon exercise, could result in an additional $5 million in cash.
--With an estimated 38 million shares outstanding for 1999, we expect about 4% dilution.
We maintain our Buy rating and our 12-month price target of $25...Therefore, due to the defensibility of the recently granted patents and the continued growth in CSPs (and recurring leverage they provide), we are using a one-year price target of $25 and maintaining our Buy rating.
We believe Open Market is a key investment vehicle to participate in the growth of the electronic commerce market...
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These are the facts, and they paint a powerful picture. Now, let's assess their implications.
BAM |
