Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Beamscope -- Ignore unavailable to you. Want to Upgrade?

To: Flipper12 who wrote (53)	4/19/2000 4:01:00 AM
From: Flipper12	Respond to of 67

Update on Ironside; Target Price Increased to $25.yorkton EVENT: Ironside closed its private placement yesterday, raising US$27 million at a post-money valuation of US$327 million. The original deal size was US$20 million; the deal size was increased to accommodate previous investors? antidilution rights. Beamscope invested a further US$1 million in Ironside as part of the deal and now holds 15.26%. We were restricted from commenting on Beamscope due to the Ironside issue. Ironside announced a major new business initiative and two new executives have been hired. All of this together is leading us to a higher Beamscope target value of $25 per share based on an IPO valuation of US$1 billion on Ironside. COMMENT: Ironside has closed a US$27 million private placement which valued the business at US$327 million post-money. The issue was heavily oversubscribed. We do not see the valuation as being an indication of the likely IPO value on the business but rather a somewhat arbitrary figure selected to ensure a highly successful private placement. We would expect an IPO valuation well in excess of the private placement price. Ironside has added two executives to its team. Dan Fairfax joins as CFO. He was formerly CFO at two Kliener Perkins backed software companies, most recently Acta Technology, Inc. He is joined by Derrick Heins as Director of Finance. He formerly worked with Dan Fairfax at Acta. Prior to that he was Controller at Rofin-Sinar (RSTI, NASDAQ), where he was the top ranking person in the finance function in North America and was responsible for preparation of that company?s S-1 registration. The company hopes to make another senior management appointment in the near term. Last week, Ironside announced a major new product initiative, The Ironside Network. The Ironside Network will be a vendor-oriented service that allows B2B vendors to have a single point of interface for all of the emerging B2B exchanges, such as those operated by Ariba and Commerce One, which have varying protocols. This will considerably increase vendors? convenience in the B2B marketplace. The revenue model is based on a monthly fee per exchange plus transaction fees, which considerably expands the leverage in the business model. While the comparable companies have declined in price as part of the NASDAQ sell off, we do not think that this impacts the viability of a possible Ironside IPO. The chart below shows this price movement since we first highlighted the comparables in January. From a valuation point of view, while the ultimate trading value may be affected, we think that the value implied by the current Beamscope share price is still far below any likely IPO value. We expect the company will try to complete an IPO before the summer. Value to BSP 2 Value per BSP share BSP share value including distribution business 1 (US$mm) (C$mm) (C$ mm) (C$ pre-tax) (C$) $199 $288 $44 $4.00 $9.00 250 363 55 5.03 10.03 327 474 72 6.58 11.58 500 725 111 10.06 15.06 1,000 1,450 221 20.12 25.12 1,500 2,175 332 30.17 35.17 2,000 2,900 443 40.23 45.23 5,000 7,250 1,106 100.58 105.58 1 Distribution business valued at C$5 per share 2 Beamscope's share of Ironside 15.26% Source: Company Reports and Starquote Ironside market cap CONCLUSION: Our valuation on Beamscope focuses almost entirely on Ironside. We value the distribution business at $5 based on its approximate book value. The recent Ironside private placement put a value on the company of US$327 million, which implies a total value of $11.57 per Beamscope share. The current Beamscope share price implies an Ironside value of only US$199 million. In the context of the current trading values of the comparables, we see an IPO valuation of US$1 billion as being reasonable. With the new business initiatives, the new hires and the private placement, we are increasing our Beamscope target price to $25 from $15. Strong Buy.