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Technology Stocks : Net Perceptions, Inc. (NETP) -- Ignore unavailable to you. Want to Upgrade?

To: John Liu who wrote (2553)	7/25/2000 7:45:55 PM
From: rupert1	Respond to of 2908

John: Their strategy is to go for the large enterprise clients. The average selling price is $340,000. Knowledge Management has a long sales cycle because it requires a pilot study. It is only after this and after the site is fully alive that they declare a win and book the big bucks. They can be about $1 million a shot. There are 7 software products in KM and e-commerce. Some customers sign up for more than one initially, but the usual pattern is for NETP to upsell. 53% of revenues came from selling to installed customers. Some of the products are sold on licence with royalties for use coming to NETP. For example Lycos hosts a mall for B2C companies and charges per hit and NETP gets a piece of that. The "shortfall" from some expectations was due in part to some KM customers which are undisclosed as yet, in the pipeline, not being fully live yet. The entirely new stream of revenue comes from the Application Service Providers which got going in 2Q. It is run from a mainframes in NETP's Dallas offices. And NETP has recently partnered with third parties to use their ASPs. There are 4 ASP products and more are to follow. They are not as scalable as the enterprise products. They cost about $10-20,000 each. Customers buy 1 to 4. There is a monthly maintenance fee of about $5,000 each product. The contract is 6-12 months. Royalties are also charged on the usage. Some consulting might be necessary at the beginning and NETP charges for this. ASP is to enter a wider market. Especially smaller dot-coms that cannot afford the enterprise software. But also large multi-channel retailers who want to get up to speed quickly. Once they get a taste of it, they want the real thing and they upgrade. ASPs did not contribute as much as thought because their revenues dont come on stream until 3Q. There is a strong pipeline of new ASP customers. (ASP is downloading the application from a mainframe and installing it in a matter of a couple of days, keeping all the data on the mainframe and using its database of customers to inform the recommendation engine). Then there is revenues from consulting, education and maintenance. Margins fell on this because of the cost of hiring and the cost of the new ASP's.