Jun 10, 1999--PWJ conf. summary.
Gateway (GTW: news, msgs) Chief Financial Officer John Todd said the computer seller is on track to meet analysts' expectations for a second quarter profit of 55 cents per share. He told fund managers Thursday at the PaineWebber Growth & Technology conference in San Francisco that he thought the company's stock is undervalued at current levels around $60 a share. He said Gateway will become aggressive in the sub $1,000 personal computer market. It's begun advertising packages for $999 and $699, he said. The company is eyeing small business customers through its Gateway Country stores. Gateway wants to position itself as more of a services company than a hardware company, Todd said, adding the company expects 400,000 subscriber to its ISP service by the end of the second quarter, up from 200,000 in the first quarter.
Critical Path (CPTH: news, msgs) Chief Financial Officer David Thatcher said the company plans to use some of the $150 million raised in a recent secondary offering to make a cash-and-stock acquisition of a calendar software maker. Critical Path, an outsourcer for electronic mail boxes, currently serves 1.4 million mailboxes, a small fraction of the 245 million mailboxes estimated last year. The company makes 32 cents per mailbox per month. Thatcher said the company will break even by the third quarter of 1999 by reducing the cost of serving those mailboxes from the current 52 cents. The company plans to increase its mailbox total to between 15 million and 20 million by the third quarter of 2000. With that scale, the company expects to earn 18 to 20 cents per mailbox per month, but costs will drop down to an average of 4 cents.
InfoSpace (INFP: news, msgs) CEO Naveen Jain told CBS.MarketWatch.com that the company is talking with utilities to make the thermostat an Internet appliance. Jain said InfoSpace has signed up a dozen partners including AT&T (T: news, msgs) and Lucent (LU: news, msgs) to create wireless Internet mobile phones. While InfoSpace moves into the non-PC Web devices, it has increased its Web partnership base to 1,800 by adding new services such as ActivePromotion, a merchandising product targeted to online and real-world retailers. Jain said the product suite will be launched in 30 days. To demonstrate InfoSpace's reach, Jain said that 85 percent of Web users are exposed to InfoSpace services, according to a Media Metrix study.
Network Solutions (NSOL: news, msgs) Chief Financial Officer Robert Korzeniewski said the potential worldwide market opportunity for domain names is 140 million. The fastest-growing opportunity for the company is registering international names. Korzeniewski expects a potential 30 million in international domain names. Acknowledging that the company will inevitably face competition from other registrars, he said he is optimistic that the company would maintain its growth by adding value-added services, such as a just-announced service deal with InfoSpace. He said that the company's ".com" directory will be rolled out soon, with 2 million small-business names at the launch. Network Solutions makes $18 for every domain name registered through rivals like Register.com until September of 2000. This raises visibility concerns for some fund managers. "Going forward, they'll lose this exclusivity," said Gene Glazer at Fortis Advisors.
Texas Instruments (TXN: news, msgs) Chief Financial Officer Bill Aylesworth said the outlook for the semiconductor industry continues to improve, citing strong orders in the first and second quarters as evidence. Aylesworth said he expects a "strong" second quarter, with solid revenue growth across the breadth of the semiconductor market. He said order trends are keeping up and he sees no disruption in inventory. Meanwhile, he said, the company's calculator business will also have a strong second quarter. Aylesworth said he expects the company to sustain overall growth beyond the second quarter. The company recently increased capital spending, but Aylesworth declined to say by how much. He said he sees "extended, if not accelerated, growth" next year.
Autobytel Chief Executive Mark Lorimer said 36 percent of the company's traffic goes directly to Autobytel rather than arriving at the site from a portal link. The company (ABTL: news, msgs) expects to have operating margins of 15 percent to 20 percent over the next three to five years against its current negative 76 percent. Much of the erosion to the bottom line is due to sales and marketing costs; the company currently spends 124 percent of its revenue on sales and marketing. Autobytel expects to reduce those expenses to 40 percent to 45 percent over the next three to five years, executives said. "I'm impressed that they help dealers reduce their costs by 31 percent," said Ken Winston, portfolio manager at Standish Ayer & Wood. "And dealers make their money on selling additional services, such as financing or insurance." Winston added that the dealers aren't seeing losses by doing business at Autobytel.
Hispanic Broadcasting Corp. (HBCCA: news, msgs) sees itself making about $300 million in radio-station acquisitions this year, said Chief Financial Officer Jeff Hinson. "We are actively seeking acquisitions on a number of fronts," he said. "We're confident we'll continue to find big signals in big markets." Hinson sees the company, which changed its name from Heftel Broadcasting earlier this week, making about $1 billion in acquisitions in the next three or four years. He projected a 20 percent growth rate in profits over that period.
Sun Microsystems' (SUNW: news, msgs) Janpieter Scheerder, president of network storage, said that the company's StoreX initiative is a key program for the tech giant. StoreX would provide an open standard for storage on information sent over the Internet, he said. Asked how the StoreX initiative might impact Sun competitors Network Appliance (NTAP: news, msgs) and EMC (EMC: news, msgs), he said that Network Appliance supports open system, but that StoreX could present a threat to EMC's business model. |
