To: Pancho Villa who wrote (2951 ) 2/13/1998 3:14:00 PM From: Lazlo Pierce Read Replies (1) | Respond to
from briefing.com <<VERISIGN INC. (VRSN) 31 1/8 UNCH. Subscriber to VeriSign's IPO certainly have no beef with any of the underwriters-- they're up a staggering 122% in just two weeks. Neither, do individual investors have anything to complain about-- based on the stock's $37.25 a share, they have been able to make as much as 77% on their money. Sounds like a good deal for everyone. Not quite. You can be sure that VeriSign management has been on the phone with lead-underwriter Morgan Stanley asking why it priced the deal so light. Based on the 3 million shares that VeriSign sold to the public, teens-of-millions of dollars were left on the table. Today, the company is receiving another slap in the face from co-underwriter BA Robertson Stephens. The firm is the first to initiate coverage of the provider of digital certificate systems that ensure secure transactions over the Internet. Its rating: a "long-term attractive." This is about the worst rating a new issue can receive from a firm that participated in the deal. It implies that the stock is overvalued, but since we assisted on the deal we'll give the company the benefit of the doubt. But, at 85x times trailing sales, VeriSign is not just bloated, it is outright obese. If it weren't for the rule preventing shorts from taking the carving knife to an IPO for 30 days, this stock would probably have a short-interest ratio that would be off the charts. But back to the facts. Robertson Stephens expects VeriSign to achieve revenue growth of more than 100% year-over-year and expects total revenue to grow at a compound annual growth rate of 113% through the year 2000. For fiscal years 1998, 1999, and 2000, the firm sees bottom-line results of ($0.81), ($0.03), and $0.45. Even looking three years out, the stock trades a ridiculously expensive 69 times earnings. Based on these numbers, VeriSign should be very thankful that it pulled even a measly "long-term attractive.">>
