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Dear William: Thanks for the link. I like the "Valuation" section:
VALUATION
We believe that iTurf is well-positioned to benefit from the continued growth of the online medium. By aggregating content and incorporating e-commerce functionality, we believe that iTurf should be able to create a compelling destination site for Generation Y online users. We further believe that as broadband Internet access becomes more pervasive and as the company focuses more keenly on addressing the various segments within Generation Y, iTurf will be able to leverage its existing business construct to aggregate a much larger user population.
Our valuation methodology for publicly-traded Internet stocks is based on the application of a price-to-forward revenue multiple applied to our calendar-year 2000 revenue expectations (of $26.8 million) regressed against projected long-term operating margins. (We note that our regression reflects the valuations of comparable companies in the Internet sector, and, as such, could shift in response to changes in those valuations.) We anticipate that iTurf will continue to successfully develop and expand its relationship with dELiA*s. In doing so, we believe that iTurf, while continuing to grow its online e-commerce revenue (which accounts for approximately 85% of the company's total revenue), will also drive additional traffic to its various Web sites through new content offerings. In addition, given iTurf's 50% plus average gross margin, we expect that the company should be able to generate a long-term operating margin of between 18% and 20%. On that basis, we have initiated coverage of iTurf's common shares with an OUTPERFORM rating.
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Separately, we note that iTurf anticipates reporting operating results for its first quarter, ended April 30, 1999, on June 1, following the market close. |
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