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Pastimes : Susie's and Tiffany's Hot Stock Tips -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ who wrote (3625)	6/18/1999 12:58:00 PM
From: Enam Luf	Respond to of 5803

MYSW: The short version Ok.. there is way too much info to post here, but I will try to summarize. MYSW originally started out in small business software, providing productivity solutions like mailing list software, address checkers, and publishing tools. The company was very poorly run, bleeding cash, and losing distribitors. The stock languished in the low single digits for a few years. Then, at the end of 1997, a new CEO came in, Gregory Slayton. Greg is a very bright guy (Harvard MBA, Fullbright Scholar, and former CEO of Paragraph Software - a company he purchased and eventually sold for 3x what he paid). Greg came in and fired almost everybody, save one VP, Joe Cortale, who stayed on as the new Executive VP. With a whole new management team in place, they revamped the entire company in less than a year. They cut costs, envigorated the distribution channel (MYSW was named Staples #1 software supplier last year, ahead of MSFT and other huge companies), and began to seek out promising opportunities in the small business market. By the end of 1998, they had turned the company back to profitable and cash flow positive. With their software business now on track and growing nicely, the company turned to the Internet for more growth opportunities. They found one in the customer prospecting business. (cont next post)

To: SusieQ who wrote (3625)	6/18/1999 1:13:00 PM
From: Enam Luf	Respond to of 5803

MYSW Part II (e-Prospecting and the marketing data industry) Customer prospecting is part of the marketing data industry, which is currently dominated by huge, multi-billion dollar companies like Dunn & Bradstreet, Polk, First Data, and Experian. These companies typically have a lock on the rights to a certain type of customer data such as insurance forms, mortgage applications, or some other source of highly personal information which has allowed them to create enormous databases, statistical models, demographic studies and other relevant market data. These databases are typically sold off (in the form of highly-targeted prospective customer lists) in pieces to large Fortune 500 companies that are looking target new customers and expand their revenue base. Since the data providers are very large, cash rich, and risk averse (stemming from the fact that they have a lock on the industry), they are not too keen on jumping headfirst into the Internet. However, the problem runs deeper than that. Most of these companies still run on old SNA mainframe computers, which require many programmers to run, and sell through commissioned sales forces. In addition, the data is normally sold in large quantities first to a list broker, who then resells it in smaller pieces to big corporate clients. This distribution is hardly efficient as everyone takes a cut off the margins on the way down. However, the data providers have been reluctant to move to net distribution as they would not only piss-off their entire multi-billion dollar list broker distribution channel, but also alienate most of their current work forces. Enter MYSW. Gregory and the MYSW team realized the inefficiencies in this model and decided to become the first e-prospecting service, catering to small businesses (of which they already have an extensive client list). The small business market had historically been out of the reach of the large data providers since their inefficient distribution made it unprofitable for anyone to sell customer prospect lists in quantities of less than 20,000 or so. So using this new market opportunity as leverage, they struck deals with both Polk and Experian to license their huge databases and sell prospects in small quantities (as little as 200 names) to small businesses, online and at a very reasonable price. Since this is all found money for the data providers, MYSW was able to negotiate very favorable revenue-sharing agreements with Polk and Experian. (cont. next post)

To: SusieQ who wrote (3625)	6/18/1999 1:25:00 PM
From: Enam Luf	Respond to of 5803

MYSW - MyProspects.com The company then created the site MyProspects.com to sell e-prospecting services to small business and started to form partnerships to market the site and generate further synergies between their growing online business and their traditional software business. Some of the more significant partnerships are with Pitney Bowes, for distribition of their mailmanager software, and address checker (which licenses the comprehensive US address list from the post office and updates monthly, generating a nice recurring revenue stream), Intuit, ZDnet, Polk and Experian (private label, OEM'ed versions of the e-prospecting service, and Netscape's netcenter small business service. All these developments have been fairly recent, I would suggest reading the press releases. From talking with the company, it seems that their strategy is to leverage their installed base of software customers (small businesses) into this new e-prospecting market, and then expand to offer other small business services... (realty? insurance? legal? etc) The potential e-prospecting market for small business could be huge, in the neighborhood of $1 billion, and if successful, my guess is the company will slowly graduate up to larger corporate customers, essentially becoming THE online list broker (which would make them a likely takeover candidate for one of the data providers). The beauty of their strategy is that the website, if successful stands to be very profitable very quickly as there is no inventory costs save the licensing fees they pay to the data providers, the overhead is very low, and the marketing data industry is one ideally suited to Internet distribution (high value, low bandwidth, data). (cont. next post)

To: SusieQ who wrote (3625)	6/18/1999 1:28:00 PM
From: run_amuck	Respond to of 5803

Susie--SHCC is starting to move on news.>

To: SusieQ who wrote (3625)	6/18/1999 1:47:00 PM
From: Enam Luf	Read Replies (1) \| Respond to of 5803

Part IV - MYSW stock valuation MySoftware is still a very small company, with a market cap of only $75 million, and is still pretty much unknown. As a small cap tech company, one must approach the investment as a venture capitalist would since the liquidity is fairly low and the risk is fairly high. I, however, think the upside could be huge and far outweighs the downside. The company just turned profitable in 1998, and is now growing earnings at a nice clip. There is only one analyst (who has a BUY rating on the stock) currently following the stock (there was 2, but the analyst as Volpe left to join E*Offering, Etrades new investment bank and research outfit, so she had to drop coverage until she gets up and running at her new job). The analyst at Van Kasper in looking for $0.36 in 1999 and $0.55 in 2000, giving the stock a forward P/E of 46x 1999 and 30x 2000 EPS (current price is 16). The company earned $0.10 cents in 1998 which gives a trailing P/E of 160. These numbers are based almost entirely on growth from their software business, and for a software only company, would make MYSW fairly valued (based on the projected growth rate). However, I think their online business is going to be successful giving the industry research that I've done and the great strategic partnerships that they are forming (plus I strongly believe in the management team). Even if the website is only moderately successful, there could be sigificant upside to those EPS projections. Plus, then you need to take into account an Internet valuation as well as, IMO, a takeover premium. In essence, one gets to make an investment in a growing software company with a top management team very early in the game, AND gets the bonus upside of a potentially HUGE Internet business, in which they the first and only player. This is why I believe the stock is so attractive at the current price. The only reason why, IMO, the stock is where it is right now (which I think is very undervalued) is because it was not an online business from the start (ie there are no big name investment banks and analysts who were involved in the IPO actively promoting the stock), is still small enough to remain unknown to most institutional investors, and plays in a market that isn't on anyone's Internet radar screen, yet. In the next year, I think we will see a few things. More partnerships and significant announcements to promote and expand their small business web services. The possiblity of a small secondary offering to increase the float and the liquidity, stimilute instituional interest and generate more big name analyst coverage, and the continued outperformance of estimates, quarter after quarter. For these reasons, I am long holding on tight (in at 13 bucks) till we see $30 bucks or higher (I think 50 plus isn't out of the question). However, this is a risky investments, and, like I said earlier, must be viewed kind of like venture capital, you are betting on the viability of the idea, faith in the management team, and the promise of future liquidity along with a MUCH higher stock price if things go right. Hope this was enough ;) I'd be glad to answer any further questions you might have. -Enam