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Technology Stocks : Enterprise Information Portals (EIP) -- Ignore unavailable to you. Want to Upgrade?

To: BelowTheCrowd who wrote (92)	2/9/2001 9:44:18 PM
From: Thomas DeGagne	Read Replies (2) \| Respond to of 183

Michael, you stated: From your table, it looks like none of these companies have adjusted their burn rates to reflect this new reality and most of them have limited cash in the bank. VIAD didn't adjust its burn rate for loss of market share but it has now. SQSW & PLUM are growing, and most enterprise SW markets are still very healthy. Most of the companies in the EIP portfolio are not pure plays and are very profitable. I would expect the least powerful to disappear, refocus on a different business or be consolidated by somebody else. The more successful ones may continue to exist in their current forms, but probably at lower valuations than many of us expected a year ago, and may be forced to merge as well. I would replace 'powerful' with 'profitable', but market capitalization is all the difference. I too see consolidation as ripe in this sector; ironicly, this makes weaker companies such as Viador good investments. Given your background at TopTier perhaps you could summarize, in your opinion, the strengths and weaknesses of the major portal products. Please include Hummingbird as well. They are of particular interest to me. Thank you, in advance.

To: BelowTheCrowd who wrote (92)	2/12/2001 12:50:25 AM
From: Carl R.	Read Replies (2) \| Respond to of 183

I agree completely, Michael, that there is a big "if" in front of those IPOs. I think that PLUMs numbers may well be impressive enough that they can get off their IPO even in a bad market, though at a lower premium, especially if they seem on their way to another good quarter. Certainly TOPT's numbers won' get an IPO done today, though. As for cash burn, VIAD did just do a big layoff to cut cash burn, but I don't think they have the management strength to get the job done. All these companies typically have unproven management, and VIAD in particular has had turnover. They lost their first two CFOs and promoted the replacement from their staff, so she almost certainly has no experience at that level. Several of the other top people also no longer seem to be around, including founders Stan Wang and Ben Connors. The new CEO also has no top management experience. SQSW doesn't seem to be in any better shape. They seem to be doing well in the medical area, not not much elsewhere. Cash is also low for them. Without an IPO, I suspect many of the smaller non-public companies will have to cut spending. Strange to see a shakeout at this early stage, but it could help the survivors. As for PLUM, if they can sustain their spectacular growth of the last two quarters, and if they can raise enough money to get by for awhile, they will grow into their expenses. Over the last two quarters gross margin has risen four-fold while R&D and marketing have only risen about 150% and administration has "only" tripled. Thus loss from operations has fallen from 100% of sales to less than 50% of sales, and in fact actually fell in real terms last quarter. I would predict that if they continue to grow they could achieve profitability by the end of 2001. One thing I do note for both VIAD and PLUM is the high CGS because of all the licenses they must pay for. This lowers the gross margin percentage and makes it a lot harder to make big money. Carl