BCE Emergis becomes a heavy hitter
taken from the Globe &Mail- Just to cheer everyone up. I know the past week has been tough, keep the faith , remember what these guys are doing! It will happen!
BCE Emergis becomes a heavy hitter
Firm eyes big leagues and E-commerce opportunities after landing major banking deal
TYLER HAMIlTON Technology Reporter, Toronto
BCE Emergis Inc. showed that it could play ball with the big boys earlier this month when it beat out International Business Machines Corp. for a chance to create an Internet-based billing system run by a group of Canadian banks.
Before the deal, BCE Emergis was a standout in the junior leagues of electronic commerce, a star in a field of up-and-comers. It had the technology depth of expe-rience and the backing of parent BCE Inc., but it lacked a high-pro-file E-commerce project that could launch it into the majors.
"You'd be surprised how many people haven't heard of them," says Jason zandberg, an analyst with Pacific International Securi-ties Inc. in Vancouver. Still, "as its profile increases, people will put them in the same category as Northern Telecom."
Formerly Mpact Immedia Corp., the company was clumsily branded Bell Emergis/Mpact Immedia after BCE Inc. took a 65-per-cent interest in it and combined its operations with the E-commerce wing of its Bell Emergis software- research unit. The company took on the name BCE Emergis last month as a result of corporate restructuring at BCE.
Possible confusion in the market surrounding its name change hasn't suppressed its stock. Since the new year began, the company's share price has climbed as high as $33.90 (in the Montreal Stock Exchange, from about $14 in early January. The stock was up 20 cents Tuesday to $25.60, giving BCE Emergis a market capitalization of about $1 .8-billion.
The company's performance has been so impressive that it was recently listed on the Toronto Stock Exchange's TSE 300 index.
The deal with the banks is just the latest in a string of lesser known contracts that the Montreal based company has won. Last November, it landed a contract to add an electronic-commerce component to Industry Canada's popular Strategis site.
Ihe site which Industry Canada says gets 10,000 visits a day from small and medium-sized businesses looking for industrial and economic information will soon be able to charge an on-line fee to handle bankruptcy registrations and filings for patents, trademarks, copyrights and federal incorporation. It will also be able to process various licences and database searches.
BCE Emergis announced a deal last month with U.S. mortage agent Freddie Mac to provide its Online Mortgage Fxplorer, a service that allows consumers to use the Internet to get mortgage rate quotes from Freddie Mac's affiliate lenders in New England. A similar project for LandSafe Appraisal Services Inc. of Dallas is also in the works.
"Deal after deal, it's been gaining a lot of steam," says Mr. Zand-berg, adding that BCE Emergis is, in his mind, one of the three top E-commerce providers in the world. "These latest deals are just the start of what we'll see in the next two or three years. Any Canadian tech fund will have to own this.
Barry Engel, senior vice-president of corporate affairs at BCE Emergis, says the company's strength has been its ability to seek out key markets such as financial, mortgage and merchant services and develop electronic and Internet-based products one step ahead of market demand.
"Whether you like it or not, in this kind of business you have to be ready before the market is ready," Mr. Engel says. "If you're analyzing what's going on in the marketplace, you've already missed it."
Mr. Engel says "E-commerce has not really happened," and that all the excitement surrounding the Internet doesn't take away from the fact that about 85 per cent of companies worldwide don't have a Web site. "The growth prospect is fantastic."
In the four months that ended Dec. 31, the company had sales of about $36-million with a loss of 5 cents a share or $2.7-million. The company announced four-month results because it's shifting its re-porting schedule to match other BCE subsidiaries.
Richard Woo, an analyst with Thomson Kernaghan & Co. in Montreal, says he expects BCE Emergis to break even in fiscal 1999 and earn profit of about 49 cents a share in 2000.
He said BCE Emergis was a suc-cess story waiting to happen, and that the exposure given to E-commerce during the holiday season suddenly thrust it into the spotlight.
"They weren't actually the darling until the market came to frui-tion; they had some products, but the market wasn't ready for the products," Mr. Woo says.
Then Christmas came, and everybody was buying CDs, books and software on-line. "Somebody needs to process these transactions and somebody has to help these companies set up their Web sites. So along comes BCE Emergis."
Mr. Zandberg says the company's next challenge is to move into the United States and diversify its revenue base internationally.
The company plans to enter the United States through an acquisition, Mr. Engel says, and has an $80-million war chest to support those plans.
"We're starting to be seen as a North American player, as opposed to a Canadian player."
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