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To: Glenn Petersen who wrote (129)	8/17/2000 11:53:55 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 218

CFLO gaining traction: aolpf.marketwatch.com CacheFlow warm and Inktomi cool Caching wars have CacheFlow gunning for Inktomi By Bambi Francisco, CBS.MarketWatch.com Last Update: 2:02 PM ET Aug 17, 2000 NewsWatch Latest headlines SAN FRANCISCO (CBS.MW) -- Investors warming up to shares of CacheFlow Thursday were cooling on Inktomi after CacheFlow reported that its caching product is gaining traction. Shares of CacheFlow (CFLO: news, chart) rose 5 percent to 98. Inktomi's long-high-flying stock (INKT: news, chart) lost 3 percent to 103. The two stocks have diverged markedly in recent sessions (see chart at right). Late Wednesday, CacheFlow reported fiscal-first-quarter results that beat analysts' expectations. The company said it generated revenue of $22.4 million, up 75 percent sequentially. It reported a loss of $4.7 million, or 14 cents per share, when excluding charges for stock compensation and goodwill amortization. The bottom-line loss was narrower than expected. An aggressive challenge "We're moving aggressively to challenge Inktomi," said CacheFlow's chief executive, Brian NeSmith, admitting that Inktomi was the market leader in the caching industry. A year ago, CacheFlow was behind Inktomi in offering a product that had the flexibility of software but the robustness of an operating system. "We've caught up," boasted NeSmith. CacheFlow added 90 new customers in the quarter just reported. New-client wins included Lycos (LCOS: news, chart), Verio (VRIO: news, chart) and Merck. As NeSmith explained in an interview with CBS.MarketWatch.com, companies are demanding integrated solutions. "Think of a toaster appliance in the kitchen," he said. It's an easy, reliable product at a reasonable cost. Inktomi just offers the caching software, and CacheFlow's products are one-third to half the cost of Inktomi's solution, NeSmith said. Reasonable prices, easy integration and comparable performance have enabled CacheFlow to shift into fifth gear and pass its rivals, according to NeSmith. "We estimate that the caching market is growing about 30 to 40 percent sequentially, and we just grew our sales by north of 70 percent," he said. NeSmith said he hopes CacheFlow's integrated software and hardware caching product will follow the same success path as Cisco's routers. Sun Microsystems was the dominant supplier in routers until Cisco, with its focus on routers alone, supplanted Sun, he said. Not the '80s anymore To NeSmith's point, in the 1980s the networks were built on black boxes, said Dick Pierce, executive vice president of strategy at Inktomi, in an interview with CBS MarketWatch. "But the Internet needs an open software platform to allow for rapid deployment for new services and new applications that represent incremental revenue to every network carrier that deploys this." Just look at the landscape. "We generated the most revenue by a factor of two," Pierce said. Inktomi has grown its quarterly caching revenue to $43 million, up 40-plus percent sequentially.