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Technology Stocks : InfoSpace (INSP): Where GNET went! -- Ignore unavailable to you. Want to Upgrade?

To: levy who wrote (7217)	6/10/1999 1:27:00 PM
From: Susan G	Read Replies (1) \| Respond to of 28311

weatherinNewYorkismorethan25degreeslessthanitwasTuesday GNET in the TOP 3 Point Gainers of ALL US Stocks Right Now Make thast TOP 2. Right under NSOL

To: levy who wrote (7217)	6/10/1999 3:57:00 PM
From: NotNeiderhoffer	Read Replies (13) \| Respond to of 28311

rl, Yes it has cooled off here in NYC, the home of the soon to be at least runner up Knicks. I will not be able to relax until Reggie Miller is off for the summer. Given the fact that the mercury has dipped there was nary a bead of sweat on Russell's brow as he went off a few minutes late because nobody from PaineWebbber was there to introduce him until about 11:22. I barely recognized him as he was wearing a tie (the horror!) but he gave a very confident and poised presentation if front of about 80 people. I have sat through perhaps hundreds if not thousands of these things in the past decade and assure you the stock price at 2:30 is a reflection of his performance in front of the crowd. Very professional-good work kiddo! I took about 8 pages of garbled notes including the breakout session which was attended by about 13 buy siders. It did not look like there were any big guns from Fidelity or Putnam in the breakout room but I did not get a good look and everybody's nametag and recognized few of them, if any. The deal with Paul Allen will be closing in the next week or two and that makes it a little dicey for the company to address specific issues relating to Vulcan and/or Charter Communications so I can't really address Josef's question head on. Russell will be at a big cable show in Chicago next week where he will no doubt spend some time talking to the Charter people. All I can say about this relationship is that they hashed out a lot of broad brush type things before they came to an agreement and once they get the deal closed there will be a rash of announcements over the next 2-6 months. Their plates are full and they have been busting their hump. I will attempt to highlight key points of the presentation and then jump to things discussed in the breakout. This list will not be exhaustive but give you an idea of how the presentation went. GNET is focused on 4 vertical markets Search Business/Finance eCommerce/Business Services Multiplayer Games Russ emphasized that they are not all things to all people like some of the bigger portals and are very focused on these vertical markets. GNET has the fastest organic (internal) growth of any of the top 25 web sites. They grew 11.2% in the march to april media metrix rankings which was among the fastest if not the fastest growth. They are at 370 million monthly page views They are also moving up the ladder and have told wall street that they intend on becoming a top 10 property within the next year or so. He gave a specific time frame but I cannot remember what that was. Becoming a top 10 site is important as the top 10 garner 70% of all web advertising spending and the top 25 sites garner 85% of all web advertising. I think he said that the number of advertisers grew from 290 in december to 346 in march. They are hiring people primarily in engineering and marketing and will be opening new ad sales offices in Detroit and other cities soon. The headcount stands at 140 people with most in sales or engineering. Only 2 people have left the company since it was founded and neither were in management or engineering. I could be wrong but I believe Russell stated that the goal is to reduce ad revenue down to 50% of total revenue by the end of the year 2000. The other emphasis is in building recurring revenue stream such as Silicon Investor now is. In January the SI membership was approximately 105,000 and we are knocking on the door of 150,000 members at this point. My $125 lifetime is looking pretty good at this point. In addition they will soon be relaunching the SI site and integrating IQC charts and the Stock site into it. They will be offering ala carte type offerings where we could elect to subscribe to the chart service for a monthly fee and thus extract more cash from us. Makes sense to me. You might want to note that they paid $20 million in stock for the charting service while Big Charts was bought for $160 million. Atta boy Russ, you cheap bastard! I suppose they are somewhat similar and we got a good deal and I suppose were a bit lucky. Hypermart Hypermart now has over 300,000 businesses and in its own right is one of the fastest growing web properties. Some time ago Russ laid out a goal to ecommerce enable the site so that these businesses can begin to sell goods and services. The idea is to have and end to end solution to create storefronts and provide the infrastructure for these people to conduct commerce over the web. They are close to having the infrastructure in place to allow credit card transactions to take place and will build a recurring revenue stream by taking a small piece of every transaction. It seems like they are one of the few games in town and have an excellent competitive position at this time. This whole angle needs to be fleshed out more but I would encourage investors to focus on this. There should be a number of announcements about Hypermart over the next few months. I am still sketchy on how Haggle fits in here but he did at least mention it briefly. Charter Communications/Vulcan The deal will close soon and then all hell will break loose. They sound like they have a million potential things to do and the minute they close we will be inundated with announcements. I think Vulcan has committed about $20 billion to cable at this point. Rumor has it that Charter will go public by the end of the year so that Paul Allen will not have to keep putting his own cash up. This will also give the stock to use as currency to make acquisitions. Charter now has about 6 million subscibers and if you figure each one reaches three people that is roughly 20 million people. More properties will no doubt be added. Russ talked about Northpoint and High Speed Access a bit but I don't have time to talk about that and frankly need to get a better handle on these operations. No doubt Charter will be one of the biggest cable operators around when the dust settles. I think that all Charter subscribers will have a GNET homepage and deal similar to those of you with @Home service now and perhaps they will have some sort of exculsive deal with GNET although I think there be other relationships involved. But it should guarantee a certain level of distribution for GNET on a broadband network. This is important as GNET will soon have one of the only narrowband and broadband distribution arrangements. Since they are already top 25 in narrowband, the broadband subscribers will be mostly incremental. It is important that they move quickly here to lock up a presence before AOL and others get their broadband strategy figured out. The old first mover advantage, ya know. Keep in mind that after the deal closes Vulcan will own 34% of gnet and hold 2 of the 5 board seats. I am unsure whether these 2 people will have pointy ears. Much of the uncertainties regarding Charter/Vulcan will be addressed over the next few months as specific things are hammered out. Be patient and keep your eyes and ears open. Should be interesting and certainly is a little confusing. International They think that Europe is ahead of the US in terms of set top boxes but behind in other ways. Currently the company does not host locally in Europe. It sounds like they feel they have a little bit of time here and we will see this develop over time. All GNET technolgy is lanquage agnostic and should scale easily. I am sure their plate is full in the US, although they will try to capitalize on it. Technology Russ tried to emphasize that they have some of the best web based technology out there and feels strongly that they have a proprietary edge in this area. Everything is higly automated and that is a big advantage. The message boards are apparently highly scaleable and they feel they can adapt the technological strengths over all their properties. Financials Russ stated that they are shooting to take gross margins to the low 80%'s and operating margins from 11%ish to 20%. After the Vulcan deal closes they will have $300 million in cash and the stock is trading at approximately 5x cash. It is probably the cheapest internet stock on that measure. In conclusion you should see a slew of announcments over the next few months as the company tries to build and solidify its already strong market position. Their goal is to be a top tier firm and they figure it will settle out to 5-6 top tier firms. I have to say I was pretty impressed by what I saw. Russ was very composed and articulate and did a great job in front of perhaps his largest wall street crowd yet. NotsureIcovereditallbutthatgivesyousomethingtochewonNeiderhoffer