O.T. The following report, compiled only yesterday, can just be thrown into the trash, as USWB announced its merger into Whittman-Hart (WHIT). I'm bummed, frankly. However, on second thought, I've decided to post it; it's an interesting market segment, tremendous growth, maybe somebody will find something of value in it. ps- Shaw (USWB)will be the CEO of the new entity. Stock's been all over the map, the acquiring company's down 19 points. (Sigh)
Nomination for a crown?
The Company
I?d like to put forth a company, USWeb/CKS (USWB) that may very well be a King in the internet professional services arena; it?s one that I don?t recall seeing on this board (then again, I haven?t read everything). "With about 50 offices in the US and overseas, the company offers its clients business consulting and planning services, as well as technical expertise in Web design, e-commerce implementation, and network development. It also provides a variety of marketing and advertising services to help its customers build brand identity and integrated marketing campaigns. Widely known as USWeb/CKS following its merger with marketing services company CKS Group, USWeb continues to drive its rapid growth through acquisitions. Clients include such companies as Apple, Intel, and Hard Rock Cafe." (Hoovers). Also Chevron, Harley Davidson, Levi?s, AskJeeves, Furniture.com and Pimco, for starters.
The company has grown mainly through acquisitions- 47 in 4 years. As a result there?s a lot of amortization and write-offs for goodwill and the like. Revenues however are exploding; in the 3rd quarter USWB had revenues of $139M, more than double those of the same period last year. Excluding $64M of non-cash charges, they earned $12.2M. There?s 4,100 employees, 400 of them hired in the last quarter.
The Market
The internet professional services market had revenues of $4.6Billion in 1998; by 2002 IDC estimates that this market will grow to $43.7Billion, almost 10-fold. I think it?s safe to say that this should focus tornado hunters to this arena. I don?t think it?ll spawn gorillas; I don?t see enabling technology. But I really look for y?all to make that judgement . I do see their size and multifaceted abilities giving them a competitive advantage (a one-stop shop).
I think it?s a royalty game with the largest player, strangely enough, being the most undervalued. Perhaps all the write-offs. I don?t think the company will be undervalued for long; the stock?s been on a tear the last several months, as has the whole segment.
The Competition
The other companies in this area are:
Proxicom (PXCM) with revenues of $53M for the last 9 mos (P/S-31.42)
Sapient(SAPE) revenues of $195M for 9 months (P/S 22.71)
Viant (VIAN) revenues $37.6M for 9 months (P/S 40.1)
Scient(SCNT)revenues $47.2M for 6 months: trailing 12 month sales $62.9M (P/S 41.26)
and USWB: revenues $324M for 9 months; trailing 12 months sales of $396M (Price/Sales of 9.64)
(EDS grew revenues at 10.9% last year, Andersen is privately held; neither are real competitors, I think)
(PS- where?ve we seen most of these names before? Page29; RFM: these are the service companies of The Early Market, specializing in business re-engineering and systems integration "Customers? need a host of high-margin services that have depth, breadth, and staying power. This creates huge demand for professional services firms, and it is they who garner the lion?s share of profits in the early markets." Depth, breadth and staying power- hence 47 acquisitions in 4 years; getting big fast; to offer a wider solution, and not be outclassed when the behemoths enter this arena.
VIAN came public in July, PXCM in April, SCNT in May. SAPE: ?96 USWB?s been public for several years.
The Stock Metrics
There are 85M shares (float 61.8M), market cap $4.43Billion, Daily volume 2.64M, Current ratio 1.45, Debt/Equity .01, Beta 1.56 (some bang for your buck). 2.36M shares sold short as of Nov.8 for a short ratio of .81 Psst! Mike! the PEG is .56! (Source: Zack?s via Yahoo!)
Management
CEO Robert Shaw was recruited from ORCL last fall; where, during 6 years at the helm of ORCL?s software consulting arm, grew the business from a staff of 300 to one of 15,000 and $2.5Billion in sales. Before that, he ran Booz Allen?s San Francisco office and Cooper & Lybrand?s information technology practice (Fortune, Dec 6,?99)
Technology(recent Press Release)
USWeb/CKS Introduces iAMcommerce - New Managed Service Rapidly Delivers Fully Customized E-Commerce Solutions
First iAMsystem Offering Combines Managed Services With Custom Consulting To Deliver 'No Compromise' E-Commerce Solution
SAN FRANCISCO, Dec. 9 /PRNewswire/ -- USWeb/CKS (Nasdaq: USWB - news), the leader in Internet professional services, today introduced the Internet Application Manager for e-Commerce (iAMcommerce(TM)) powered by OneSoft(TM). iAMcommerce is a managed application service that also includes the full spectrum of USWeb/CKS Internet professional services, from strategic consulting and branding to custom technology integration. Because it is a combined offering, USWeb/CKS is able to quickly deliver a flexible, customizable, ``concept-to-cash' e-Commerce solution to its clients.
iAMcommerce is the first offering in the USWeb/CKS Internet Application Management System, or iAMsystem(TM) family of services. iAMsystem is a set of managed business applications and services that is being developed and will be deployed and managed on the USWeb/CKS Internet framework, or iFrame(TM). By deploying and managing iAMcommerce and other iAMsystem services on iFrame, USWeb/CKS can integrate and scale its clients' e-Commerce solutions to adapt to business change and growth, thereby maximizing recurring Time-to-Value.
``The incredible pace of change is creating the need for software as a service,' said Robert Shaw, CEO of USWeb/CKS. ``Companies need to focus on staying competitive, not trying to maintain a complex IT infrastructure. Our ability to deliver services that encompass both managed application services and custom consulting gives our customers the best of both worlds -- solutions that conserve time and resources, but provide the competitive advantages of custom-built solutions. This is the essence of Time-to-Value -- and why USWeb/CKS is the leader in Internet professional services.'
``With iAMcommerce powered by OneSoft, companies no longer have to compromise customization for speed-to-market,' said Alex Hawkinson, executive vice president, USWeb/CKS Managed Services. ``Many e-Commerce solutions and services on the market today, whether custom-built or packaged, can be inflexible, leaving companies with a risk of obsolescence only months after they are implemented. In contrast, we expect iAMcommerce solutions to be rapidly implemented, easily adapt to changing business models, enable a broad range of features to be added over time, and accommodate increasing levels of consumer traffic.'
iAMcommerce Service Engine -- Plugging Business into e-Commerce
Built on iFrame, the iAMcommerce service engine consists of all the hardware and software necessary, including OneSoft's OneCommerce(TM) as the core Internet commerce application, to allow companies to plug into a scalable, extensible concept-to-cash e-Commerce solution. By delivering software as a service, iAMcommerce eliminates the expensive start-up costs of building and managing a solution internally.
Companies that plug into iAMcommerce can also receive the benefits of USWeb/CKS' customized professional services offerings including strategic consulting, branding, technology consulting and integration. This enables USWeb/CKS and their clients to spend more time on initiatives that create market differentiation and less time on building and maintaining the basic e-Commerce platform.
iAMcommerce -- Delivering ``Future-Ready' e-Commerce
Built on a standardized architecture, iAMcommerce offers a flexible and extensible solution that will easily plug into other iAMsystem applications, including those now in development for Customer Relationship Management (CRM) and BackOffice, providing suites of applications that will work together to address growing customer needs.
In addition, iAMcommerce powered by OneSoft delivers real-time scalability, so companies don't have to build a devoted infrastructure to handle spikes in demand. By delivering iAMcommerce on iFrame, USWeb/CKS is able to leverage its substantial infrastructure to scale as needed to accommodate tens or millions of Web consumers, enabling 24x7x365 operations, even during the holidays. This kind of ``success-based provisioning' means that as a business grows, so does its e-Commerce solution -- in real-time. It also delivers cost-savings, as iAMcommerce customers are charged only for actual usage.
The unique modular architecture of iAMcommerce can also expand to encompass new ways of reaching customers and be reconfigured to manage individual customers and groups of customers in many different ways. With iAMcommerce, there are no standard business models to which a company's e-Commerce strategy must conform; companies are free to reach and serve customers in any way they choose. And all of these changes can be made at any time, without having to re-build the entire system.
``iAMcommerce powered by OneSoft creates a new standard in the marketplace, reducing Time-to-Value for USWeb/CKS customers. OneSoft's market leading enterprise-class software enables Extensible Internet Commerce, allowing businesses to scale and extend their operations at Internet speeds,' said Jim MacIntyre, chairman and CEO, OneSoft Corporation.
iAMcommerce -- True Personalized Online Marketing
iAMcommerce powered by OneSoft delivers unique personalized marketing capabilities that profile customer behavior and enable dynamic content presentation based on customer preferences. Using a sophisticated customer profiling method, iAMcommerce not only captures purchase information, but collects ``affinity' scores that quantify customer preferences as they browse through the site and score products and services that attract their attention.
iAMcommerce powered by OneSoft enables easy integration of commerce, content and community into an e-Commerce site. By adding these services, companies can deliver useful, compelling content to consumers that helps build customer loyalty.
Standards-based Architecture Ensures Flexibility
Key to iAMcommerce's flexibility is its underlying iFrame architecture. iFrame is based on an open industry standard, Extensible Markup Language (XML), widely regarded as an important data interchange format for the Web. This XML foundation facilitates integration of iAMcommerce with existing systems and new application components. USWeb/CKS believes that XML will play a critical role in the future of digital business because it enables integration across industries and between business systems, regardless of platform, operating system or underlying technology.
iFrame -- the Architecture for E-Success(TM)
USWeb/CKS' iFrame is a standardized architecture for developing, deploying and managing all iAMsystem application services. iFrame's combination of standards, tools, application components and methodologies enables iAMsystem applications to integrate seamlessly together. Deployed and managed in USWeb/CKS' state-of-the art data centers, iFrame provides a reliable, securely managed environment for iAMsystem services. Its flexible, scalable design delivers a long-term, sustainable platform for growth that helps ensure E-Success.
iFrame enables USWeb/CKS Managed Services to proactively monitor and manage all iAMsystem resources, from the network infrastructure and server, all the way to the application layer. Because of this, USWeb/CKS is able to monitor and resolve technical issues in real-time and deliver competitive service level agreements (SLAs) that provide superior availability of iAMsystem services.
In addition, iFrame enables companies that implement iAMsystems to become part of Digital Value Networks (DVNs), creating entirely new business relationships and economies online. DVNs will use industry-standard XML schemas to seamlessly exchange information between software applications, integrate business processes, and conduct business over the Internet with trading partners and customers.
More information about iAMcommerce can be found in the related press release issued today titled, ``USWeb/CKS Selects OneSoft's OneCommerce as Core Application for iAMcommerce Service.'
Pricing, Availability and Support
iAMcommerce powered by OneSoft is available immediately. Pricing is a combination of project- and monthly subscription-based fees. Initial customization and subsequent feature enhancements are priced on a per-project basis. The monthly subscription fee is calculated on a per-processor basis and includes: the OneCommerce application and upgrades, hardware, maintenance and support, and application hosting and management. Each client's monthly fee is determined by a formula that analyzes site volume (visitors, transactions, etc.) and the processing power required to manage that volume each month.
USWeb/CKS Managed Services provides a single point of contact for all iAMcommerce customer support requests -- from training and help-desk inquiries to additional custom design and integration. (Ed- I added the emboldening)
Recent Developments (Nov.29 Press Release)
1. USWeb/CKS was named to Fortune magazine's new e-50 guide, Smart Reseller magazine's Smart 50 listing, and received awards from four industry competitions for its creative work with Apple Computer, Inc. These six awards and honors in one week come on the heels of recent recognition including, USWeb/CKS CEO Robert Shaw being named to Advertising Age's i.20, and the company being named to Deloitte & Touche's prestigious ``Fast 500' Program.
Among the most prestigious honors, USWeb/CKS was named to Fortune's e-50 Index, a new guide for tracking the Internet economy. The index comprises 50 leading e-companies and was created by Fortune magazine to serve as a ``modern day antidote to the Dow Jones industrial average.' USWeb/CKS was also one of four companies from the e-50 named to Fortune's ``Power List' and was profiled by senior writer Eric Nee as a company maintaining its position as the No. 1 Web consultant by using its diversified services to help companies move onto the Net.
2. (COMTEX) B: Microsoft, USWeb/CKS Ink $90M Deal
B: Microsoft, USWeb/CKS Ink $90M Deal
Sep 29, 1999 (Tech Web - CMP via COMTEX) -- San Francisco -- In an embrace of a business model that could theoretically unseat its rule on the desktop, Microsoft pledged approximately $90 million to USWeb/CKS
In return, Microsoft gets the e-services provider's co-marketing and implementation support for forthcoming Microsoft products, as well as what analysts described as a new way to penetrate small- to midsized-business markets.
In an event for press and industry analysts held here Tuesday, USWeb's
Chief Executive Robert Shaw and other executives talked about plans to
develop iFrame, a set of customizable applications, standards,
components and methodologies that will serve as a template for USWeb
consultants building solutions for clients.
USWeb's other buzzword of the day was iAMsystem, or Internet Application Management System, which is in effect a set of line-of-business applications focusing on customer relationship management, e-commerce, back office and knowledge management.
These applications will be built with Microsoft products, though Shaw noted that USWeb will "be free to use any product we want" --not only those from Microsoft, in the creation of its e-business solutions.
Alex Hawkinson, executive vice president for USWeb/CKS's managed services division, said that some 3,500 of USWeb's approximately 4,500 global deployments use Microsoft products. USWeb executives broke the $90 million down into smaller chunks: $67.5
million would go toward joint marketing and development of solutions based on USWeb's iFrame managed services, and another "several million" will go toward training USWeb consultants.
The balance comes from Microsoft's plan to purchase one million shares of USWeb/CKS common stock at a fixed price of $27.59 per share over the next five years, executives said. The companies are also cooperating on a joint technology lab slated to
open in Redmond, Wash. by year's end, where integration of Microsoft's Active Directory into iFrame and testing of Microsoft's forthcoming AppCenter product will be critical, Shaw said.
John Connors, vice president of Microsoft's worldwide enterprise group, was on hand here to provide the software maker's view of the deal. "We think software is going to be a service," Connors said, characterizing that service as "an extension of the PC" and Microsoft's response to the rise of application service providers as "reinventing
ourselves as a company."
The PC industry is only aided by the rise of hosting companies, service providers and other types of companies thriving in the Internet era, Connors said. "Any industry that shops hundreds of thousands of units year after year" is in little danger of faltering, Connors suggested.
Analysts said that the deal would help Microsoft meet goals it has set for itself.
"Microsoft has always stated it wants a significant presence in the e-services space," said Steve Lidberg, a research analyst with Pacific Crest, Portland, Ore. The deal will most likely benefit small to midsized companies that might get "a cheaper entry point" to business applications, he added. Copyright (C) 1999 CMP Media Inc.
Caveat
All of this is yesterday's news |
