An offering for you:
boston.com
BOSTON CAPITAL
Envision's stock is valued highly but its worth is less clear
By Steven Syer and Charles Stein, Globe Staff, 5/17/2000
What exactly is Envision Development Corp. and why is it worth a half-billion dollars?
These are no simple questions. Envision, based in Marlborough, has lived through a striking number of strange twists and turns in its eight-month life as a public company. We'll describe them, then you decide what the stock is worth.
Envision hit the public market just last September under a different name and headquarters city, then called perfumania.com and based in Miami.
By early this year, the renamed company had been transformed into a self-described emerging leader in new Internet technologies with a thinly traded stock. But if you would expect shares like that to get clobbered in the spring technology stock plunge, think again: Envision shares gained 24.4 percent while the Nasdaq index plummeted 34.2 percent between March 10 and April 14.
At its peak, Envision was a ten-bagger for IPO investors, rising from its initial price of $7 per share to $74.50 seven months later, in late April. Even with a significant price slide over the last week, Envision still ranks as the fifth best-performing public stock in Massachusetts so far this year, according to Bloomberg News. Total market value: $496 million.
Despite its ''breakthrough technology'' promotion, Envision has never publicly reported a dime of revenue from anything other than the sale of discounted, brand-name perfume over the Internet. And just this week, Envision said it sold the perfume business back to its creators in a deal whose terms the company declined to disclose.
To date, Envision has revealed its relationship with only two technology customers: M/A-Com Inc., the Lowell-based subsidiary of Tyco International Ltd. and Complete Wellness Centers Inc. of Winter Park, Fla., a struggling operator of medical centers with a total public stock market value of $5 million.
Envision chief executive William Patch said the company was working for multiple financial service clients but declined to identify them.
Envision executives said they are working on several Internet-related technologies, emphasizing products that improve access to corporate Web sites via wireless devices, voice-over-Internet services, and secure document and information exchange over the Web.
''We have aggregated and continue to develop significant breakthrough technologies,'' Patch said.
Like most newly public companies, Envision received some support from stock analysts employed by the investment banking firms that underwrote its IPO: Cruttenden Roth, Pennyslvania Merchant Group Ltd., and Boston's H.C. Wainwright.
Wainwright analyst Georgia Kounadis stood head and shoulders above anyone else when it came to her enthusiasm for Envision, reiterating her ''buy'' recommendation seven times so far this year. But she cut her rating of Envision to ''accumulate'' on Monday, just three trading days after her most recent ''buy.''
When we reached Kounadis on Monday and said we were interested in her Envision recommendations, she told us she had to take another call and would phone us back. We haven't heard from her since.
But it was Cruttenden Roth that led the IPO of perfumania.com last Sept. 29, raising $16 million by selling 2.5 million shares. Perfumania Inc., the Miami-based fragrance retailer that created the online business, sold 1 million shares of its Web company for cash at the same time but continued to own about half the newly public company.
Who owned what became more complicated after that.
Within weeks, a firm called Dominion Income Management Corp. of Mill Creek, Wash., surfaced as the owner of 1.55 million perfumania.com shares. It owned nearly half of all the publicly traded stock and appeared to have acquired it all on the day of the IPO.
Even bigger ownership changes took place by January. Alta Ltd., a trust with a mailing address in the Jersey islands, had exercised an option to buy 2 million shares of the Internet company from Perfumania Inc. for $6 each. It still held options to buy an additional 500,000 shares for $8.
But wait, there's more: Dominion Income Management and Alta Ltd. soon turned over all their stock to Zero.net, a San Francisco venture capital firm that has invested in a series of young technology companies. Just like that, Zero.net emerged as the owner of a 35.6 percent interest in perfumania.com.
Who are all these people? Jake Weinstock, the 28-year-old chief executive of Zero.net, describes Dominion as a low-key private money manager that had owned his venture firm, and Alta as a European private investment company.
Meanwhile, there was plenty of other action at perfumania.com, which has been buying privately technology companies it describes as building blocks for its new corporate strategy.
It agreed to buy Envision Development, a professional services business in Marlborough and renamed the entire company after its acquisition. Envision bought QVtech and its Interosa e-mail security product in a stock swap that appeared to be worth something north of $100 million. This month, Envision bought LiQ Inc. and its voice-over-Internet products.
This week, Envision announced the sale of its perfume business back to Perfumania Inc. Where's the revenue going to come from now?
''Other revenue streams are in line as soon as our acquisitions are completed, then we can begin reporting those revenues,'' Patch said.
As for Envision's remarkable stock resilience this year, at least before it shed 25 percent of its value in the last week, Patch credited investors who understood plans to roll out all the company's new products.
''It's being bought and held by people who understand where we're going, not so much where we've been,'' he said.
We'll just wait and watch. |
