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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (17492)	11/21/1999 5:42:00 PM
From: Ditchdigger	Respond to of 29382

<Unlike its .com counterparts, the stock trades modestly at a P/S ratio of 15.> From a Salomon Smith Barney report on VRIO dated 11/18 "We reiterate our 1S (Buy, Speculative Risk) rating and our 12-month price target of $52. Our $52 price target represents a Firm Value to revenue multiple of 13x our 2000 estimate, a discount to the current Firm Value to revenue multiple of 17x our 1999 revenue estimate. *************** VRIO: Strike While The Iron Is Hot! Salomon Smith Barney Thursday, November 18, 1999 -------------------------------------------------------------------------------- --SUMMARY:--Verio Inc.--Telecommunications Services Verio issued $400 million 10 5/8% Senior Notes due 2009 through a private placement offering. We expect a part of the proceeds to be used to accelerate and expand Verio's Internet Data Center buildout where the company already enjoys a dominant position in the shared hosting market. We also expect the company to continue to spend on developing its application hosting platform, which is already under way through the recent agreement to participate in Microsoft's Office 2000 application hosting pilot program. We reiterate our 1S (Buy, Speculative Risk) rating and our 12-month price target of $52. --EARNINGS PER SHARE-------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 12/98 EPS $(0.51)A $(0.41)A $(0.50)A $(0.78)A $(1.52)A Previous 12/99 EPS $(0.62)A $(0.61)A $(0.61)A $(0.70)E $(2.54)E Current 12/99 EPS $(0.62)A $(0.61)A $(0.61)A $(0.70)E $(2.54)E Previous 12/00 EPS $(0.68)E $(0.67)E $(0.65)E $(0.63)E $(2.62)E Current 12/00 EPS $(0.68)E $(0.67)E $(0.65)E $(0.63)E $(2.62)E Previous 12/01 EPS $N/A $N/A $N/A $N/A $(2.02)E Current 12/01 EPS $N/A $N/A $N/A $N/A $(2.02)E Footnotes: --FUNDAMENTALS-------------------------------------------------------------- Current Rank........:1S Prior:No Change Price (11/16/99)....:$40.25 P/E Ratio 12/99.....:N/Ax Target Price..:$52.00 Prior:No Change P/E Ratio 12/00.....:N/Ax Proj.5yr EPS Grth...:0.0% Return on Eqty 98...:N/A% Book Value/Shr......:N/A LT Debt-to-Capital(a)76.9% Dividend............:$N/A Revenue (99)........:260.00mil Yield...............:N/A% Shares Outstanding..:76.3mil Convertible.........:Yes Mkt. Capitalization.:3071.1mil Hedge Clause(s).....:# Comments............:(a) Data as of the most recently reported quarter. Comments............: --OPINION:------------------------------------------------------------------ Verio (VRIO) announced the successful completion of its private placement $400 million 10 5/8% Senior Notes due 2009. We expect a majority of the funds to be used for infrastructure buildout of Internet Data Centers (IDCs). We anticipate that the proceeds will provide the financial capacity for close to 20 more IDCs. The increased IDCs will allow Verio to establish a greater domestic and global hosting presence while leveraging its Tier 1 backbone. Verio recently signed an agreement with Microsoft (MSFT) to build a platform to deliver Windows 2000 applications over the Internet. We believe the current funding will allow Verio to further expand the application hosting platform and deliver other eventually more complex enterprise software solutions down the line. Already, Verio stands to benefit from trends like the partnership Oracle recently signed with Ford to jointly develop the software platform to handle Ford's business-to-business e-commerce among its 30,000 suppliers. We expect more and more major enterprises will enter the e-commerce arena and would require significant amount of web and application hosting facilities as well as expertise. As these suppliers scramble to get up and running, we believe Verio emerges like the white knight, providing intimate expertise that allows these types of businesses to continue playing in the supply chain. The broader data center coverage will position Verio to further benefit from the trend toward Virtual Private Networks designed for application hosting. The Internet supply chain announcements by General Motors and Ford will require close to 60,000 small/medium/large vendors to share and access hosted content via the Internet, and are examples of the ever-growing adressable market for Verio's services. We reiterate our 1S (Buy, Speculative Risk) rating and our 12-month price target of $52. Our $52 price target represents a Firm Value to revenue multiple of 13x our 2000 estimate, a discount to the current Firm Value to revenue multiple of 17x our 1999 revenue estimate. ---------------------------------------------------------------------------- # Within the past three years, Salomon Smith Barney, including its parent, subsidiaries and/or affiliates, have acted as manager or co-manager of a public offering of this company. ---ADDITIONAL INFORMATION AVAILABLE UPON REQUEST--- Salomon Smith Barney ("SSB"), including its parent, subsidiaries and/or affiliates ("the Firm"), usually makes a market in the U.S.-traded over the counter securities recommended in this report and may sell to or buy from customers, as principal, securities recommended in this report. The Firm or employees preparing this report may have a position in securities or options of any company recommended in this report. An employee of the Firm may be a director of a company recommended in this report. The Firm may perform or solicit investment banking or other services from any company recommended in this report. Securities recommended, offered, or sold by SSB: (i) are not insured by the Federal Deposit Insurance Corporation; (ii) are not deposits or other obligations of any insured depository institution (including Citibank); and (iii) are subject to investment risks, including the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources SSB believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute SSB's judgment as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. This report has been approved for distribution in the United Kingdom by Salomon Brothers International Limited, which is regulated by the Securities and Futures Authority. The investments and services contained herein are not available to private customers in the UK. This report was prepared by SSB and, if distributed in Japan by Nikko Salomon Smith Barney Limited, is being so distributed under license. This report is made available in Australia through Salomon Smith Barney Australia Securities Pty Ltd. (ACN 003 114 832), a Licensed Securities Dealer, and in New Zealand through Salomon Smith Barney New Zealand Limited, a member firm of the New Zealand Stock Exchange. This report does not take into account the investment objectives or financial situation of any particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision. The research opinions herein may differ from those of The Robinson-Humphrey Company, LLC, a wholly owned subsidiary of SSB. Salomon Smith Barney is a service mark of Salomon Smith Barney Inc. © Salomon Smith Barney Inc., 1999. All rights reserved. Any unauthorized use, duplication or disclosure is prohibited by law and may result in prosecution. --------------------------------------------------------------------------------