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Technology Stocks : Interliant, Inc. (INIT) -- Ignore unavailable to you. Want to Upgrade?

To: Susan Saline who wrote (1166)	3/22/2000 10:46:00 AM
From: AlienTech	Read Replies (1) \| Respond to of 1214

Does Interliant Deserve Bashing? Tuesday, Mar. 21, 2000 15:26 PDT By Richard Hefter, America-iNvest.com You gotta like a stock that just took a bashing in Barron?s. This weekend, the publication listed the 50-some Internet stocks most likely to run out of money this year, and one of them was Interliant (INIT). ?Completely inaccurate,? cries William Dering, analyst with C.E. Unterberg, Towbin. In fact, Interliant has recently raised approximately $200 million in financing, which should satisfy the company's cash needs for another 24 months, he says. The last time we wrote about a Barron?s bashing we didn?t trust (see Jan. 10 column), the stock went on to gain 50%. (See ?D‚j… Vu? below.) Category Killer Purchase, N.Y.-based Interliant provides a range of Internet services for businesses, including Web site hosting, messaging and knowledge management, security, e-commerce, customer relationship management, enterprise resource planning, distributed learning, and Web-based rental applications. Among its recent news, Interliant announced last week that it has entered into a strategic relationship with Microsoft, whereby Microsoft will invest $10 million in Interliant and the two companies will develop application hosting services on the Windows 2000 Server and Exchange 2000 Server platforms. ?The addition of Microsoft to its stable of strategics is clearly a positive. It not only adds to Interliant's already dominant position in the desktop application hosting space, but represents yet another validation of Interliant's technical expertise,? said DLJ analyst Harry E. Blount. ASPs (application service providers) do just that: host applications. They provide server space for running things like Lotus Notes (Interliant calls itself the leading provider of Lotus Notes/Domino hosting solutions); and e-commerce (through its strategic alliance with IBM, Interliant claims to be one of the first ASPs to offer hosting services based on IBM's Net.Commerce software suite). Blount says Interliant is ?the category killer in the desktop application hosting space and should therefore be a core holding in any basket of Internet infrastructure stocks.? The application hosting space is expected to grow from $0.9 billion in 1999 to over $23 billion by 2003, for a CAGR of 100%+, and Interliant currently has over 1,000 application hosting customers. ?The company appears to be making all the right moves. In addition to expanding its relationship with Microsoft, the company has taken a number of other meaningful strategic steps over just the past month or so, including: obtaining strategic funding from Dell and BMC Software; adding Herb Hribar as CEO; and expanding its strategic relationship with Network Solutions, as well as acquiring two PeopleSoft (Enterprise Resource Planning) focused companies.? Blount says these applications acquisitions give Interliant a foothold into the high-margin, low-churn enterprise-application market, which helps them expand their focus from primarily desktop applications. He?s got a $70 target (the price is down nearly 7 points to 38 since the weekend article), and says the company is trading at just 8X 2001 revenue estimate compared to 22x for rival USInternetworking. DEJA VU The last time we wrote about a Barron?s bashing we didn?t trust (see Jan. 10 column, the stock went on to gain 50%. That was NetCreations (NETC), the e-mail marketing company that a Barron?s source had noted was overvalued, but which has since risen from 34 to 51. Richard Hefter is editor-in-chief of America-iNvest.com.