nice article about commtouch..which is by the way trading at
35 1/4 now.
cbs.marketwatch.com
ommtouch execs see rapid growth
Plus: Paul McCartney update: Mills Music Trust
By Thom Calandra, CBS MarketWatch
Last Update: 7:01 AM ET Dec 16, 1999
More StockWatch
Commentary New!
LONDON (CBS.MW) -- When CEO Gideon Mantel of Commtouch
Software shifted his work address to Silicon Valley, California, from
Israel, the former sports executive had some concerns.
The weather was similar: warm and sunny. Software engineers in both
places were hard driving, although paid far more in Santa Clara County
than in Tel Aviv.
The Israeli executive's biggest worry? "We were
coming to the promised land from the promised
land and, well, we didn't know anyone," Mantel
recalls. "So it is lucky we met Isabel."
Isabel Maxwell, the Santa Clara e-mail software
company's president, was hard driving. As a
headhunter. As a founder of early Web search
engine and ratings service McKinley Group, which
eventually was sold to Web portal Excite. As a
daughter of the late, controversial London media
tycoon Robert Maxwell. And as a deal maker.
The British transplant to California says it didn't
take long to see the promise of Commtouch
(CTCH: news, msgs). "I love the Israelis, and I
have had a great time with Gideon," said Maxwell.
The company has half its 220 employees in Tel
Aviv
The Israel-California company installs e-mail services in 18 languages on
Web sites around the world. Commtouch's Zapzone Network lets users
create e-mail addresses and personal calendars off of Web sites as
diverse as About.com (BOUT: news, msgs), Scandinavia Online, Talk
City (TCTY: news, msgs), the Web site of the Cherokee Nation and
Microsoft co-founder Paul Allen's go2net Inc. (GNET: news, msgs).
(Allen owns about 10 percent of Commtouch.)
Oh, and www.garfield.com, where you lovers of Garfield the cartoon cat
can get e-mail with "cattitude."
"Literally in 10 minutes, they can have this product up on a site, and in two
seconds you can become john@snowboarded.znn.com. Or whatever,"
Maxwell told me this week. "People really use this because people have
real affinities and e-mail has the highest use rate on the Web."
Customized e-mail marketing and messaging services are hot. This week,
venture capital company CMGI Inc. (CMGI: news, msgs) said it would
buy yesmail.com Inc. (YESM: news, msgs), which markets to customer
by so-called permission-based e-mail, for about $500 million in stock.
"I think more and more customers with Web sites realize they don't have
to cede e-mail to a Hotmail.com," Maxwell said. Microsoft (MSFT:
news, msgs) owns free e-mail service Hotmail.com and is about to use
Commtouch for e-mail services on several as-yet-unnamed Microsoft
Web sites.
Mantel says his company will benefit from relationships with
permission-based e-mail companies such as Mypoints.com (MYPT:
news, msgs), which collects data on willing Web users' buying habits and
other preferences. Commtouch, which now has 8.5 million users of its
e-mail services, is acting as a kind of distribution channel for e-mail
marketing companies.
"We have the advantage that very few businesses have: price and
distribution," Mantel says. "We bring them (Mypoints) eyeballs and we
are getting a very nice cut from the revenues generated ... without having
to build the marketing infrastructure that they built."
The three or four Wall Street investment banks, including Piper Jaffray,
that follow Commtouch estimate sales for the fourth quarter will approach
$2 million. Internet critics might say that makes the company's $400
million worth of shares, which have been trading for six months on
Nasdaq, seem expensive.
Not so, says Mantel. Sales are growing 100 percent quarter to quarter.
Wall Street estimates the company will log $25 million or more of sales
next year.
"We now have only one competitor, Critical Path (CPTH: news, msgs),"
says Mantel, who is 40 years old. (See six-month chart of two
companies shares, with money flow indicator.) Critical Path, which
offers Internet facsimile services, has a market capitalization of $3.8
billion.
"The technological difficulties to building a scaleable e-mail service are
very large," Mantel says. "AOL is using Critical Path. Microsoft bought
Hotmail and has now signed an agreement with us. Xoom.com (NBCI:
news, msgs) bought two companies, and Yahoo bought RocketMail."
Maxwell says 8-year-old
Commtouch is about to sign
several contracts with large Web
publishers, including Gannett
Co.'s www.usatoday.com, one of
the largest Web publishers of
daily news and data. The latest
client: Japan's Asahi Nippon.
All told, Commtouch's services
can be seen on 175,000 Web
sites, the two executives say. Customers number about 200.
One future area of growth: small and mid-sized domains. Like doctor's
offices. "If you are a little clinic and Dr. Jones leaves the company Friday
and Dr. Smith joins Monday, you have to call some administrator on the
weekend, right?" says Maxwell. "With us, you can do that yourself."
Maxwell, who at the age of 49 has built or salvaged several companies in
the past decade, most of them in the San Francisco area, is confident
Commtouch's shares will be valued on a price-to-revenue multiple that
looks ahead to next year's sales. If so, at 20 times estimated sales of $25
million for year 2000, Commtouch shares would fetch more than $40 a
share.
On Thursday, before the U.S. stock market opened, Commtouch shares
sold for $32.
Sir Paul McCartney: Find time this weekend for "CBS MarketWatch
Weekend," our financial television show that runs on many CBS stations
in the United States. This week, I will be reporting from London about
one or two overlooked Internet stocks from Europe that might make
sense in the holiday rush.
Britons, by the way, were excited about a small concert this week that
featured former Beatle Sir Paul McCartney. (So was the rest of the
world.) The musician headed back to his Liverpool roots at Liverpool's
Cavern Club, where the Beatles last played in 1963.
Earlier, we wondered about the stocks that Sir McCartney or his financial
managers might be buying. Richard Lederer of Lederer & Associates in
California says a company called MPL Communications of New York
City owns 79,609 shares or 28.67 percent, of the units outstanding for a
Nasdaq bulletin board stock called Mills Music Trust (MMTRS: news,
msgs). MPL, Lederer says, stands for McCartney Paul Linda.
The 35-year-old trust's
receipts (see multi-year
stock chart) are
derived from copyrights
established prior to
1964, "and such
receipts fluctuate based
upon public interest in
the nostalgia appeal of
older songs," Mills
Music Trust says in its
latest statement to the
U.S. Securities and Exchange Commission. The company, or trust, has
paid out as a dividend $3.91 per unit for the past 12 months. That comes
to about 10 percent of the thinly traded stock's price of between 30 and
35 (that is the spread between the bid price of the stock and the ask
price.)
"Mills Music owns a large catalog of songs and gets paid royalties when
the songs (it owns) are played," Lederer says. "Duke Ellington's works
are among those included in the catalog." The trust, which distributes
royalty income from songs to its shareholders, has 227,000 units
outstanding.
"The composition of Old Mills Catalogue is estimated to be in the excess
of 25,000 titles of which approximately 1,500 are at present producing
royalty income," the company says in a statement. The trust has been
recording royalty income of about $1 million a year.
On Thursday, I put a call into Mills' individual trustee in Manhattan to ask
about MPL Communications and whether Sir McCartney has an
ownership stake. At press time, I was awaiting a reply. |
