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Technology Stocks : USinternetworking , USIX -- Ignore unavailable to you. Want to Upgrade?

To: Richard Tai who wrote (467)	8/17/2000 4:55:31 PM
From: Bullitt	Read Replies (3) \| Respond to of 605

Just received this from a relative who is a salesperson with USIX. It should answer some of the questions posed on this board. Bullitt To: USI Worldwide > From: Andy Stern > Subj.: USIX Stock Performance > > As shareholders, we all share an interest and concern over our > recent stock performance. Despite reporting a very strong 2nd quarter, > the stock has continued to decline. While no one can really explain the > vagaries of the capital markets, we do seem to be hearing several key > themes affecting our stock. > > * General negative press on the industry. There have been a number of > skeptical articles about the ASP industry lately. Most have argued that > the value proposition only makes sense for small enterprises, and that > fewer of them are engaging ASPs than were expected. The recent failure of > Pandesic and Ebase have heightened these concerns. Our own experience, of > course, is to the contrary. Our Fortune 1000 clients find plenty of value > in our product offering, and penetration is increasing. We're different > in this regard than most of the so-called "ASPs" that have sprung up in > the past few years, but with 1,500 "ASPs" out there, the markets are > getting confused. USi's success over the past few quarters demonstrates > that we continue to be the leader in a growing ASP market. We will > continue to demonstrate our differentiation to the investor community. > > * VC overhang and VC distributions. Our Venture Investors agreed to a > staggered lock-up when we did the secondary in February. That is, they > agreed to a slow release of their shares over 8 months, starting in June. > That was good news when we did the secondary (showed commitment), but now > some investors are worried that the market will be flooded as the lock-up > comes off. Several of our investors have made SEC filings disclosing that > they were distributing some of their shares, no longer subject to lock-up, > to their limited partners. This doesn't necessarily mean that their > limiteds are selling, but some investors are worried by these > announcements. > > * Investor focus on profitability and cash flow. Investors are much > more focused on profitability today than at any time in the past three > years. You can see this most dramatically in the B2C stocks. We're being > penalized because, while our margin is improving, investors are not yet > convinced our model will scale and our projected EPS breakeven is well > beyond their typical 2 quarters outlook. This combined with recent press > articles has raised investor concern about "dot.com" cash positions, and > we've been on a couple of the lists. We've spent a lot of time assuring > investors that we do not have a cash problem (we don't), but this may be > contributing to our doldrums. The recent commitment we've received for > $175 million of credit should have put any investor cash concern to rest. > Now we need to focus on accelerating our breakeven. > > * The NASDAQ is down. NASDAQ was above 5000 when we hit our high in > March. It's below 4000 today. Our stock has a high beta, which means it > always swings more than the NASDAQ as a whole*up and down; it was up more > in March, it's down more now. Moreover, the overall market volatility is > making investors skittish. It's almost as if they are looking for reasons > to sell, heightening the impact of the issues above. > > So what can we do? Dave Miller and his team have been working > overtime to keep our investors informed of the real ASP story. As the > investor community returns from its summer vacation, we're going to get > out on the road and spend more time with them. We're going to demonstrate > our penetration of Fortune 1000 clients; and we're going to show them how > the recent organization and process changes we've made can get us to > breakeven faster than they think. However, achieving our plan and posting > great results is what will really turn our stock around. > > Here is the important message. We are seeing great marketplace > success. Our value proposition is being adopted by major brand name > companies in the mainstream economy. We are not running out of cash. We > are growing our business and our capabilities at a blistering rate. We do > need to listen to Wall Street's concern, and make sure that we are > capitalizing on the opportunities for scale in our business. We can do > this by constantly improving our processes, learning from our experience, > productizing our infrastructure and routinizing our offerings, and driving > our unit costs down and our quality up. The stock market is fickle, but > it always catches up. As our success proves the validity of our model, > our stock price will come along. We are all in this for the long term. > We are creating an industry and building the dominant participant. We are > realizing fantastic success, and we are just getting going. I appreciate > each of the contributions you have made, and am confident that we will > continue to build a great, profitable company with a stock price to match. > > Andy > > <<USIX Stock Performance 8-15-00.doc>> >