Dear Shareholder:
March 10, 1999
Beginning this quarter, and continuing at least through the second quarter, I intend to provide our shareholders monthly updates on our web site in those months that we do not report quarterly results. This is the first such update. The topics we would like to discuss this month are:
* An update on quarter-to-date financial performance
* Key activities this quarter
* Comments on our stock price
Quarter-to-date Financial Performance
As of the date of this letter, we are on track to meet our financial goals for the quarter. We are also working several excellent long-term customer opportunities in the quarter that would be a great addition to our current customer base. I attended a European Operations review last week, and was pleased to find that Europe was ahead of plan at the beginning of the month after some tough quarters last year.
Of course as always in our business we expect to have a significant amount of business closed during the last two weeks of the quarter. And until that business is actually signed and delivered, there is uncertainty in our financial performance. But that said, we like where we are at this point in the quarter.
Key Activities this Quarter
Our key activities this quarter have been completion of our financial plan, progress on our infrastructure projects, the launch of harbinger®net and Harbinger Labs, the finalization of some key business relationships, and the winding down of our discontinued products and services.
I am pleased to report that we have made good progress in each of these areas. We communicated our financial plan for 1999 and 2000 both internally and externally on February 17, and announced harbinger®net and Harbinger Labs on that date.
We hope to announce some of the key new relationships that I allude to in the first paragraph during the next 4-8 weeks. And the last activity, managing the discontinuance of certain products and services, will continue to be an important activity for the next few quarters.
Comments on Our Stock Price
I expect that Harbinger shareholders are disappointed with the performance of our stock. For what it's worth, I thought I would share my perspective.
I believe we are being hurt by three factors. One is the loss of credibility arising from missing expectations in 2 of 4 quarters during 1998. And although we met revised expectations in Q4, we should not expect lost credibility to be reestablished after just one Quarter. Secondly, our key competitor's stock has also been under pressure, and we believe that this has caused some investors to question the attractiveness of the sector. Finally, and all of these points tend to reinforce each other, there is concern that we cannot be as strong a force in the new Internet business to business E Commerce marketplace as we have been in the old.
To the first point on reestablishing credibility, I believe that will only come with execution and I feel good about our ability to meet our goals and grow our business. To the second and third points, we are a different company from our competitors with different strengths and weaknesses. My bet is that our leadership in the IP based business to business E Commerce marketplace will become clearer in the coming weeks. We have invested heavily in this area during the last few years, and those investments are beginning to pay off. Stay tuned!
Harbinger is a different company than it was in 1998. We are leaner, more streamlined, more focused, and better organized. We have good and improving systems to help us manage our business. We have new and very experienced managers in key leadership roles. You cannot see the impact of these changes externally as clearly as those of us within the company can. But I believe that you will be able to see the results of these changes in the coming quarters.
Nothing in life is certain, of course, and when assessing our likelihood of success, we have to take into account many factors. But having made my own personal assessment, I have decided to become more heavily invested in Harbinger, as have a number of other managers and employees. We believe we can see where we are headed, and to us, it is a very exciting place.
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So in summary, your team is pretty optimistic these days, and feeling good about our progress and prospects. We hope that the reasons for our optimism will become clearer to hose outside the company in the coming weeks.
Thank you for your continued support and encouragement.
Sincerely,
C. Tycho Howle, Chairman & CEO
harbinger.com |
