Great news!!! This was released Sunday, but for some reason it does not show up on any of the Investment sites:
4/18/99 Dow Jones News Serv. 19:55:00
Dow Jones News Service
Copyright (c) 1999, Dow Jones & Company, Inc.
Sunday, April 18, 1999
Navidec Spin-Off Probable; New Web Site Capability Planned
By Tom Locke
DENVER (Dow Jones)--Two major moves appear to be on the horizon for Internet
solutions and automotive Web site company Navidec Inc. (NVDC).
Executives of the 6-year-old company say a spin-off of Navidec's automotive
unit is probable and that a new service to allow purchasing through its
automotive Web sites is in the near-term future.
The Englewood, Colo., company announced March 30 that it was "considering a
plan" to establish a new entity for its auto unit. That move is "probably
something that will occur in the next six to 12 months," Chief Financial
Officer Pat Mawhinney told Dow Jones.
The major Web site-enhancement move is "in the near future" and would enable
consumers to purchase autos using Navidec as a single point of contact, said
Navidec Vice President Michael Kranitz. "We intend to make the transaction not
only more convenient but less expensive."
Now Navidec auto Web sites take consumers to the "purchase request" stage, in
which they enter their names and contact information for follow-up by a dealer.
But soon consumers will be able to act on a fixed, quoted price and receive
closing documents via Federal Express.
Creation Of New Entity Aimed At "Undervalued" Stock
Money raised in an Automotive Group offering would be used partly to build
brand awareness, Chief Executive Ralph Armijo told Dow Jones. "Our biggest
weakness today is that we're not recognized. People don't know us."
Navidec hopes to remedy that, not only with consumers but in the investment
community. It recently hired the Financial Relations Board for public
relations, Van Kasper & Co. as its financial adviser, and Arthur Andersen as
its accounting firm. "We've really tried to package ourselves," Armijo said.
Both Armijo and Mawhinney described Navidec's stock as "undervalued," a
condition they hope to address through the spin-off. They think the separation
should simplify things for investors, thus unleashing value. "Most investors
don't understand both sides (of Navidec's business)," Mawhinney said.
On one side is NetSolutions Group, which provides services such as hardware
and software integration, e-commerce site development, and e-mail solutions.
From that base, Navidec expanded into its second major area, automotive, using
the software and knowledge gained in creating a Web site for Denver-area Burt
Automotive.
Among Navidec's auto Web sites are CarWizard.com and LeaseSource.com,
acquired in December from Kranitz and his wife, Abby Kranitz. Kranitz research
information is combined with dealer inventory information into a single
package.
Through Navidec's USWheels.com product, it establishes a presence in
particular markets, such as coloradowheels.com in Colorado. Its financing
partner is Bank One Credit Co., a unit of Bank One Corp. (ONE), and in each
market it partners with a local media outlet. Navidec expects to expand to 40
markets by year-end and 75 markets by the end of 2000.
Navidec also licenses its content to third parties.
In March Navidec's Web sites posted 14,000 purchase requests and 10 million
page views, Armijo said.
While those numbers may be impressive, the spin-off of the Automotive Group
is still not a certainty. Navidec would still need board of directors approval
and completion of its selection of investment bankers, Mawhinney said.
Navidec would probably retain 70% to 80% of the new spun-off entity, and the
offering could be private, to an outside investor, or public, he said.
One Observer Thinks Spin-Off Might Be This Summer
David Keiter, a managing director at Joseph Charles & Associates Inc., said
he thinks Navidec will accomplish the spin-off this summer if the market
continues to be strong. He estimated the offering would raise about $20
million.
Joseph Charles, which took Navidec public in 1997, has clients who own
Navidec stock, he said. "The management has lived up to what they said they
were going to do."
Potential risks for investors might include a fall in the Internet stock
group or a competitor coming up "with a new trick that could put them at a
disadvantage," he said.
While Navidec may opt for a private offering, recent initial public offerings
of auto-Web-site companies might sway it toward a public offering.
On March 22, Autoweb.com Inc. (AWEB) priced its IPO for 5 million shares at
$14 a share, or $70 million total, and on March 23 those shares closed at 40.
As of Friday's close, Autoweb's 23.5 million shares were valued at $787
million.
On March 25 Autobytel.com Inc. (ABTL) priced its IPO of 4.5 million shares
at $23 a share, or $103.5 million total, and on March 26 they closed 40 1/4. As
of Friday's close, its 17.9 million shares were valued at $644 million.
Navidec's 6.5 million shares were valued at $88 million, as of Friday's
close, but it's a smaller company and less than one-eight of its 1998 revenue
came from automotive.
Navidec posted a 1998 net loss of $3.9 million, or $1.10 per share on revenue
of $8.6 million, compared with a 1997 loss of $4.1 million, or $1.47, on
revenue of $6 million. Autobytel had a 1998 net loss of $19.4 million on
revenue of $23.8 million and Autoweb had a 1998 net loss of $11.5 million on
revenue of $13 million.
Navidec Expects Net Loss of $5.5 million in 1999
So all three companies are losing money. And Navidec anticipates posting a
net loss of another $5.5 million in 1999, even though revenue is expected to
double to about $18 million, Mawhinney said.
NetSolutions is expected to be "at or near break-even" for the year, he said,
but the Automotive Group is expected to lose money because of investments in
new Web site capabilities and advertising. The Automotive Group isn't expected
to break into positive net income until 2001.
Fueling its auto optimism is increased Internet use in general for buying
autos. At Burt Automotive, 178, or 9%, of its 2,000 vehicle sales at six
Denver-area dealerships in March were generated through the Internet, said Burt
Executive Vice President L.G. Chavez Jr.
Internet auto sales are "growing pretty dramatically as time goes on," Chavez
said. Two years ago, Internet sales were about 1% of Burt's business, and he
figures they could grow to 25% or more. "It's probably growing at a rate of
about 10% increase a month now," he said.
John Blair, president of Automotive Lease Guide LLC in Santa Barbara, Calif.,
also emphasized the upward Internet trend. "I think the Internet's definitely
going to have a major impact on the way cars are leased and sold in the future.
It's already happening," he said.
Blair's company, which provides residual value information on leased
vehicles, reached a deal in March to market Navidec's CarWizard information to
lending institutions and others. Navidec was picked, in part, because it has "a
broad array of services and they have a lot of expertise in the technology
area," Blair said.
Armijo points to Navidec's technical expertise, its ability to license its
content, and its lower cost per lead as advantages over competitors. Navidec
which gets revenue from dealers for those leads - and from advertisers on its
Web sites - has a low cost per lead because it gains presence at Internet
portals through the value of its content rather than by paying for it.
Armijo foresees Navidec's technical expertise leading to more offshoots, like
autos, stemming from NetSolutions clients in other industries such as real
estate or health care. "We clearly do not see (NetSolutions) as a business that
is a declining business," Armijo said. "We see that as an incubator for
possible additional vertical markets."
- Tom Locke; (303) 293-9294
(END) DOW JONES NEWS 04-18-99
07:55 PM
---- INDEX REFERENCES ----
COMPANY (TICKER): Navidec Inc. (NVDC)
NEWS SUBJECT: Dow Jones News Service; Dow Jones News Wires; CEO
Interviews; Dow Jones News Special Reports; Earnings
Projections; Late Ticker Stories; Corporate Actions (DJN
DJWI CEO DJS ERP LAT CAC)
MARKET SECTOR: Technology (TEC)
INDUSTRY: Computers (CPR)
PRODUCT: Computer Hardware; Corporate Earnings (DCO DEU)
REGION: Colorado; North America; United States; Western U.S. (CO NME
US USW)
Word Count: 1255
4/18/99 DJNS 19:55:00
END OF DOCUMENT |
