SEC NOMINEE William Donaldson director of company that used paid research from buy report mill.
William Donaldson , nominee to head the Securities and Exchange Commission, was a director of mail.com. Mail.com emploted paid touts such as J.M. Dutton & Associates, LLC. which wrote simular reports for such great companies as jmdutton.com located on their web site
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Analyst: Robert Davis other recent reports include such greats as massive fraud 800AMERICA.COM, INC napeague.com
11/11/2002 Research Note Speculative Buy EasyLink Services Reports Its Results For Q3 of 2002.
9/24/2002 Research Note Speculative Buy EasyLink Institutional Meetings Scheduled On West Coast
9/4/2002 Initial Report Speculative Buy EasyLink Services Speculative Buy Rating Issued In Initial Report
EasyLink Services Corporation Robert M. Davis
September 3, 2002
Symbol (Nasdaq): EASY Fiscal Year Ending:
December 31
Recent Price: $2.60 Year EPS P/E
REV's PSR
Price Range: $0.66-$8.70 1999A $(19.63) ---
$12,709 ---
Avg. Daily Vol. (30 day): 26,300 2000A $(27.79) ---
$52,698 ---
Industry: Business Services 2001A $(20.24) ---
$123,929 ---
12 Month Target Price: $3.25 2002E $( 0.67) ---
$121,599 .4x
Market Capitalization (000): $43,467 2003E $0.32 8.1x
$148,752 .3x
Capitalization (000): 6/30/02 Estimated 2002- 2004 Annualized
Shares O/S: 16,718 Growth Rate: 15%
Cash & Equiv.: $12,042 Dividend: ---
Net Working Capital: $(13,650) Yield: ---
Long-Term Debt: $79,272 Inside and >5% Ownership: 37%
Shareholders Equity: $19,411 Institutional Ownership 17%
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Rating: Speculative Buy
Basis for Rating
EasyLink Services Corporation (EasyLink) is "a leading global provider of services that power the exchange of information between enterprises, their trading communities, and their customers." As a "Managed Service Provider," EasyLink currently serves more than 20,000 companies, including over 400 of the Global 500, by providing the most secure, efficient, reliable, and flexible means of conducting business communications, both electronically and otherwise.
During the last year and a half the Company has successfully repositioned itself as a Managed Service Provider focusing entirely on providing business-to-business "transaction delivery services."
EasyLink has zeroed in on the key trends that will impact its industry over the next five years and has introduced a series of sophisticated new products that will capitalize on these market forces. These products have received positive reviews from industry consultants and trade publications, and are being rapidly accepted by this market.
As a result, the Company now provides its clients with the widest range of business-to-business (B2B) communications alternatives ñ more complete than that offered by its competitors.
In addition, the Company has reorganized itself financially, reducing its debt level and eliminating significant excess costs. As a result, it has become operating cash flow positive and is now on the cusp of becoming profitable.
EasyLink appears to be undervalued, both in purely economic terms and in comparison with its peer group. Although there clearly are certain risks associated with this stock, we feel that they are more than fully reflected in its market price. We feel that EasyLink can justify a market price in excess of $3.00 a share. Improved economic conditions should be accompanied by price appreciation.
A Speculative Buy recommendation has been assigned solely because the Company is carrying a high level of debt and its revenues are on a plateau as the result of current economic conditions. "Speculative" reflects the increased risks associated with these conditions. Improvement in these areas should lead to recommendation upgrades in the future.
Company Thumbnail Description
EasyLink Services Corp. describes itself, quite accurately, as "a leading global provider of services that power the exchange of information between enterprises, their trading communities, and their customers." More specifically:
"The exchange of information between enterprises" refers to purchase orders, invoices, shipping notices, insurance claims, trade confirmations, travel information, funds transfers, and other documents needed to complete transactions between one business and another.
"Services" refers to a range of electronic communications tools that allow its clients to manage and deliver these transaction documents from virtually any enterprise environment to any other, using a wide range of electronic formats.
As a Managed Service Provider, EasyLink currently serves more than 20,000 companies, including over 400 of the Global 500, by providing the most secure, efficient, reliable, and flexible means of conducting business communications, both electronically and otherwise.
Note: The Information Technology industry has come to rely on a wide, and frequently changing, vocabulary of acronyms, jargon and "buzzwords" to describe various events, technologies and relationships. In certain cases, their use makes it more difficult for a "non-techie" to understand the discussion. To aid our readers, this report will clearly define each acronym as it is used, and limit the use of such acronyms whenever possible.
Corporate History
Summary: Although EasyLink's original business plan appeared to be viable in the late 1990s; its weaknesses were subsequently recognized. As a result, the Company has now repositioned itself. However, in doing so, it has continued to exploit those emerging technologies around which its original business plan was based.
The Company began business in 1996 as a global provider of e-mail services. It launched its first commercial e-mail service in November 1996 under the name iName, Inc, but changed its name to Mail.com, Inc. and began branding its services under that logo in January 1999. The Company offered its users a large selection of easy-to-remember, personalized e-mail addresses from its own portfolio of approximately 1,200 domain names.
During this period, the Company began to build a respectable position in its marketplace. Among its accomplishments was the development of what would become the fifth largest consumer-oriented e-mail advertising network in the industry, according to Media Metrix. It also built up a number of geographically oriented portals (Asia.com and India.com) as well as its portfolio of roughly 1000 domain names. The Company's primary source of revenue was advertising-related sales, including direct marketing and e-commerce promotion, but it also generated revenue from a variety of "premium" e-mail services to which individual users subscribed.
In late 1999 and early 2001, the Company also made several acquisitions of businesses that would ultimately come to drive its current business plan.
One critical acquisition came in late December 1999, when the Company agreed to acquire NetMoves (Nasdaq: NTMV) in a stock swap valued at $162.9 million. NetMoves specializes in online document delivery; its Internet fax service has about 146,000 users. This acquisition brought a number of fax-related products into the Company's product portfolio, as well as giving it additional online document delivery expertise.
Another took place in February 2001, when the Company acquired Swift Telecommunications, which itself had just acquired the EasyLink Services business previously owned by AT&T. At the time, management stated, "This will bring our outsourcing messaging services to 40,000 businesses, including most of the Fortune 500 companies."
However, before the end of 2000, it became apparent that part of the Company's business model, to profit by providing consumer e-mail services, would ultimately not be successful. As a result, it shifted its focus to that of exclusively providing outsourced messaging services to enterprises, and it divested its advertising-supported consumer businesses.
Needless to say, EasyLink has changed tremendously in the year and a half since this decision was made. The Company has repositioned itself as a Managed Service Provider focusing entirely on providing business-to-business "transaction delivery services." In addition, it has introduced a series of even more sophisticated new products which are being rapidly accepted by this market. Lastly, it has reorganized itself financially, eliminated significant excess costs, has become operating cash flow positive and is now on the cusp of becoming profitable. The specifics of each of these developments will be detailed in this analysis.
EasyLink's Business Environment
Summary: The following section outlines the "transaction delivery services" business, including "supply chains" and "trading communities." It then discusses the overall market for these services, reviews the technological changes impacting this industry, and then evaluates how and why this business environment is currently changing and the directions in which this industry is likely to move in the near future. Its purpose is to provide a background against which to view EasyLink's current business model and recent performance.
What are Transaction Delivery Services?
A transaction between businesses normally involves a substantial level of communications, as information is passed back and forth between the parties themselves and other entities involved with the transaction, and within each of the parties themselves. These communications are definitely not "idle chatter," since they are formal documents and may carry contractual obligations. "Transaction delivery services" is a term used to describe the process of maintaining and expediting this flow of information.
Although this process may be initiated by a "catalog" of some type that provides product specifications, delivery terms and pricing information, the real communications flow starts when the buyer sends a purchase order to the seller. This purchase order specifies the particular goods that the buyer wants, the quantity needed, the price, and also where, when, and how they are to be delivered to the buyer. The seller may in turn confirm to the buyer that they have received the purchase order, and whether they can or cannot meet all of its specifics.
The seller then needs to convert the information on this purchase order into a form that is compatible with its internal bookkeeping, manufacturing, or inventory control procedures. As the shipping date approaches, the seller prepares whatever shipping documents are required. They may need to send copies of them back to the buyer and also to other entities involved in the shipment.
After the seller ships the purchased goods, he then sends the buyer an invoice specifying the payments to be made and any payment terms. Likewise, when the goods are received, the buyer may need to communicate this information back to the seller. The buyer then needs to make one last communication to the selleróto pay for the purchased goods, either by check or by wire transfer. |
