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Technology Stocks : NetGravity [NETG] -- Ignore unavailable to you. Want to Upgrade?

To: michael who wrote (144)	7/11/1998 5:36:00 AM
From: burgerking	Read Replies (1) \| Respond to of 589

long term investors: NETG is scary! I agree with "michael" on this issue. I chose not to invest in NETG because I'm trying to invest for the long term (years). However, it seems like you may do quite well investing (long) in NETG for the short term. Looking at NETG's prospectus (form s-1 filed 4/24/98 with the SEC): "To date, the Company has generated all of its revenue from the license and related upgrade, consulting and support of its AdServer family of software products. In March 1996, the Company's initial release, AdServer 1.0, became generally available. Subsequently, the Company has had two major releases of its AdServer products: AdServer 2.0 in October 1996 and AdServer 3.0 in June 1997. The Company believes that its current AdServer family of software products and software products in development, together with the related consulting and support services, will continue to account for substantially all of its revenue for the foreseeable future." While Adserver seems to be a great product (I haven't used it myself), I don't see a big market here. How many companies are going to be buying a software program that helps them deliver ads on their websites? This is a classic build (with the assistance of software such as Adserver) vs. buy (e.g., contracting with DCLK) decision. Building your own takes a lot of work (including marketing and billing for the ads) which only makes sense for extremely busy Inet sites. Only in this way are DCLK and NETG in competition, and I think NETG's market is much more limited. To be successful NETG will either need to sell a whole lot copies of Adserver, or become a more service oriented company by assisting (and charging) companies to install and maintain Adserver. This latter approach may require a different focus for the company and has a lot of risks (company focus, personnel changes, etc.) I'm also quite worried that Adserver is not patented technology. DCLK owns a patent on their technology, but NETG has only copyright laws to protect them. Although Adserver sounds great, it doesn't sound like there's anything particularly innovative in it. (I'm not sure there's much to patent here, but I'm not a lawyer.) What would keep Microsoft/Imprise/Symantec/IBM/Sun/Open Market/Oracle from developing competing software? Many of these companies have much deeper pockets and more mature customer relations. This company's stock being "hot" may put their software idea into the sights of these companies. Similarly, if Microsoft, Netscape, Sun or others decide they want a piece of the pie, they could easily change their products to be "less compatible" with Adserver. (Microsoft do this? Nahh!) NETG admits this in their prospectus as follows: "The Company's products are designed to operate on a variety of hardware and software platforms employed by its customers in their networks. The Company must continually modify and enhance its products to keep pace with changes in hardware and software platforms and database technology. As a result, uncertainties related to the timing and nature of new product announcements, introductions or modifications by vendors of operating systems, particularly Microsoft and Sun, by vendors of relational database management software, particularly Oracle and Microsoft, and by vendors of browsers, particularly Netscape and Microsoft, could materially adversely impact the Company's business, results of operations or financial condition. The failure of the Company's products to operate effectively across the various existing and evolving versions of hardware and software platforms and database environments employed by customers could have a material adverse effect on the Company's business, results of operations or financial condition. " All of this scared me off from NETG ...