WOW, it's quiet in here. I'm not sure if it's an indicator WRT CMGI or not, but it's noteworthy.
Anyway, far be it from me to let the silence continue. Interesting article on CPTH (A CMGI holding) and their competitor SWCM (a personal fave that's worth your consideration).
Special Delivery
Analysts Favor CPTH, SWCM
by Juliana Tillema
August 24, 1999
Email has progressed from a novelty to a requirement for business communications. The new generation of email technologies encompasses a wide range of software and services, from email outsourcing to the secure delivery and tracking of sensitive documents. Below are highlights of several companies that are attempting to lead the market of new communication technologies.
United Parcel Service (UPS: research) recently invested $4 million in newly-public Tumbleweed Communications Corp. (TMWD: research, earnings), a secure email service that provides cryptographic security and certified delivery and tracking for electronic messages. This investment will allow UPS to provide secure email delivery of documents that might otherwise be sent using the company's overnight service.
Among companies that have garnered attention from Wall Street analysts are Critical Path Inc. (CPTH: research, earnings) and Software.com (SWCM: research, earnings). Both companies provide special email services to customers, and both are favored on Wall Street. Another player in the avant-garde communications arena, eFax.com Inc. (EFAX: research, earnings), provides free fax-to-email services but is viewed less favorably among analysts who question the viability of the company's business model.
Pathways to Profit
Critical Path Inc. (CPTH: research, earnings) went public in March at $24 per share and recently traded at $37; it is at the forefront of the email outsourcing market, in which companies run email servers for their clients. Critical Path intends to reduce clients' costs and help them improve their customer service.
Stephen H. Sigmond and Cameron P. Steele of Dain Rauscher Wessels give Critical Path a BUY - SPECULATIVE rating in their August 3 report on the company, listing a price target of $120. The analysts believe that the recently announced partnership between Critical Path and Exodus "enhances the competitive position of two best-of-breed Internet infrastructure service providers."
The terms of the deal call for Exodus to resell, using its own name, Critical Path's messaging services to its corporate customers. Critical Path will become an Exodus customer by locating part of its East Coast operations in an Exodus data center, and Exodus will become a Critical Path customer for its internal employee email.
Sigmond and Steele go on to say that although terms of the deal were not disclosed, they believe Critical Path and Exodus will share revenues generated from mailbox hosting fees, and that Critical Path may receive more than the $4 per mailbox per month that the company currently averages.
The analysts also note that Critical Path is focusing more attention on services for the enterprise market, which supports higher price points, while continuing to serve Internet service providers and consumer-oriented companies.
Critical Path has grown in recent months, the analysts report, and has built its direct sales force and expanded its corporate customer base in three acquisitions: Fabrik Connect, dotOne, and Amplitude Software. These acquisitions add a total of 2150 new customers to Critical Path's customer base, according to Sigmond and Steele.
Crossing their T's, Dotting their I's
Software.com (SWCM: research, earnings) recently partnered with Sprint PCS (PCS: research, earnings) to provide the communications infrastructure for Sprint's digital wireless messaging service. The Sprint PCS service delivers electronic messages to wireless telephones from the Internet or other wireless devices.
John F. Powers of BancBoston Robertson Stephens reiterated his BUY rating of Software.com in a July 22 report, based on revenues and earnings that exceeded the analysts' estimates. Revenues were $9.0 million, exceeding the analyst's $8.5 million estimate by 6% and up from $6.1 million the previous year. The company has provided email software to more than 1000 service providers, who have collectively licensed more than 47 million mailboxes from Software.com, according to Powers.
Highlights this quarter include five new Tier 1 customers (service providers with more than 100,000 seats) added this quarter, including Bell Canada, Netscape's last large North American account, which will convert to Software.com and will provide managed messaging. This brings Software.com's total number of Tier 1 accounts to 35. Also, says Powers, a new product called WebEdge, the result of the acquisition of Mobility.net, was created and shipped to the first customer.
Software.com had 792 revenue-generating customers last quarter. Of the top five revenue generating accounts in the second quarter, three were from Europe, and two were from North America. The sales cycle for most accounts has not changed significantly this quarter, according to Powers.
Software.com was founded in January 1993 in Santa Barbara, Calif. and provides carrier-class email software and unified messaging software. The company offers three products focusing on email and has more than 1000 customers, most of whom are Internet service providers. |
