**Internet Stock News Announces Investment Opinion**
Business Wire - June 25, 1999 17:17
SAN DIEGO--(BUSINESS WIRE)--June 25, 1999--While Net stocks see-sawed up and down this week in anticipation of a raise in interest rates, we decided to take the week off and attend the Inaugural Interactive Gaming Expo & Summit in Vancouver, Canada.
As the first ever of its kind, the expo hosts some 20 Internet gambling, sportsbook, and online lottery companies interested in marketing their products and services to some 400 attendees as well as a group of industry leading panelists focused on the Internet gaming sector.
While we must admit that the summit was anything but exciting during its first two days, we were excited to meet with several emerging Internet companies in the Vancouver area. Long known for its securities regulation violators and stock manipulators, we found that the beautiful city of Vancouver sports a dichotomy of boutique Internet investment companies and Internet software companies.
We visited management at several Vancouver-based Internet companies and were particularly impressed in our meetings with Electric Mail, Information-Highway.com, Internet Direct, Topclick, and Starnet Communications.
While we were excited about the prospects for all of these companies and will inform you more about them after the expo is over, we cannot help but report to you about our visit to Starnet Communications (OTCBB:SNMM).
On our first trip to the company's corporate headquarters we found the company to be situated in a poor part of town where they occupied a large portion of a business high-rise building. Expecting a staff of some 20 individuals, we found the company to have some 100 employees on various floors of a complicated maze-like office decorated somewhat like a futuristic art gallery.
With huge steel doors decorated with the Starnet logo and security only second to that of companies like IBM, Starnet boasted numerous divisions with young and energetic web designers, programmers, network gurus, marketing representatives, and customer service staff.
We were treated to a tour of the facilities as well as overviews of prospective developments in the company's gaming and horeseracing wagering business. Needless to say, we were more than impressed.
After receiving a personalized introduction to their emerging horeseracing simulcast business, we feel very comfortable in making Starnet our number one featured investment for 1999. When we compared the company's business to that of its highly valued competitor, Youbet.com (NASDAQ:UBET), we found it to be far more promising.
On Thursday, Mark Dohlen, the company's inspirational CEO, met with us and discussed the current state of his company as well as the prospects for Starnet's future growth. We asked him several important questions and received very informative answers.
We first asked Starnet's CEO to us the name of a comparable business which operated in the traditional business arena. We used the comparisons between Amazon.com (NASDAQ:AMZN) and Barnes & Noble (NYSE:BKS) as well as the comparison between Ebay (NASDAQ:EBAY) & Sotheby's (NYSE:BID) as an example.
Mr. Dohlen answered that he felt that there was no single existing comparable traditional business. He stated, "Starnet serves as the back-end provider and operator for the Internet gaming industry." Mr. Dohlen used a slot machine manufacturer as an initial example but stated that one could not compare Starnet to his company because that type of company could not control the means of its production. Starnet, on the other hand, is able to manufacture and operate virtual casinos including all of the virtual slot machines and is able to share in the revenues of these virtual slot machines, an advantage that the traditional slot machine manufacturer does not have.
Mr. Dohlen then made reference to the importance of the principle of the Economies of Scale and stated how his company's ability to license the gaming software instead of selling it causes his business to be far more scaleable than that of a traditional gaming company. We brought up the businesses of MGM Grand (NYSE MGM) and Circus Circus but were still told that these could not be considered as comparable to the niche business of his company.
He stated that Starnet's business is not based on sales like a slot machine manufacturer but, rather, because of his company's software licensing business, it is based on a continuing revenue stream of a percentage of all bets placed on Starnet's licensee gaming sites. Mr. Dohlen states, "When you spin a wheel in which the payout is 35 to 1 and the odds are 38 to 1 you 're going to win, that's a pretty good business to be in. We're not like the gaming manufacturers in that they are limited in their upside because they're not participating in the business with the operator and they have been limited by geography."
Regarding the scalability of Starnet's gaming business, Mr. Dohlen stated that Internet gaming is generic and extremely scaleable. He stated, "It goes across all cultural barriers and jurisdictions. There is no industry that is similar. We have been unable to come up with a more effective use of the Internet for business than gaming. The no. 1 search word on the Internet is no longer sex. It is now casino. If you think you are going to beat us. I'm sorry."
In summary, we felt that Mr. Dohlen displayed strong leadership skills and an ability to provide company direction like no other. Our positive feelings regarding this company have been strongly reinforced after our meeting.
While many have claimed that Starnet's competitors include Cryptologic (TO:CRY), GIC Global (OTCBB:GGNC), Total Entertainment (OTCBB:TTLN), Anchor Gaming Inc. (OTCBB:SLOT), Trans World Gaming Group (OTCBB:IBET), Argosy Gaming Co. (NYSE:AGY), International Game Technology Inc. (NYSE:IGT), Cryptologic Inc. (CA:CRY), GLC Limited (NASDAQ: GLCCF), Atlantic International Entertainment Ltd. (OTCBB:AIEE), Cybergames Inc. (OTC BB: CYGA), IGN Internet Global Network Inc.(OTCBB:IGNIF) and Global Games Corp. (OTCBB:GLOW), we cannot find any comparison to Starnet.
Sincerely, Internet Stock News Insight For The Intelligent Internet Investor internetstocknews.com
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DISCLAIMER:
This Internet Stock News press release contains independent and objective commentary about Internet stocks. This service is provided by Internet Stock News which is a web-based media entity. Pursuant to SEC disclosure requirements, the editors, employees, and directors of Internet Stock News and IP Equity Internet Investments, the publisher of Internet Stock News, are believed to hold no more than one hundred thousand shares of Starnet Communications Inc. IP Equity has not been compensated by Starnet.
CONTACT: IP Equity Internet Investments
Dan Mutters, 800/997-3323
Dan@ipequity.com
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