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Interview with Microforum CEO...
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Special Interview:
Undiscovered TSE Company Signs Contracts With Fortune 500 Clients - Q3
Earnings Report May Be Spectacular
With Howard Pearl, The New CEO Of MCF
January 18, 1999
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Stockhouse.com Interview With Howard Pearl, The New CEO Of MCF
• • •
SH: What happened to MCF, over the past year, which resulted in your becoming CEO of the company?
Howard Pearl Rick Winston, the former CEO, was the turnaround specialist. The company was on the brink and he found
some financing. He lean'ed and mean'ed the machine, as it were, and set it on a reasonable path. I'm more of a "growth
specialist." I've taken on a number of businesses in the past, all in the communications field or related, and managed them
from having been turned around to more successful businesses. I'm the marketer. I'm the growth guy.
SH: You had a $10 million financing that was cancelled and recently MCF completed a lesser financing. What happened?
Howard: The reality is that the market was weak. We're not in an uncomfortable position now. The decision was made, at
the time, by the board for the shareholders to not dilute the stock after the share prices tumbled from $3+ dollars down into the
dollar range. As a shareholder, myself, I wouldn't have wanted that to happen. Therefore, we recommended strongly against
it. We had people that were willing to raise us the $10 million but we said, "Thanks but we don't need it." I don't think that's
altogether bad.
SH: MCF recently announced the sale of the widely popular Gamesmania. If it was profitable, why did you sell it?
Howard: Gamesmania is an e-zine. In order to generate revenue from that, we've got to sell advertising space or create it
into a larger portal. That's not the business we're in. Therefore, why are we doing it? Why are we putting any resource
behind it? That fact that it was profitable, or that it wasn't profitable, is not relevant. The fact is that it no longer fits the
business model and it won't take us where we want to go, as a complete unit. So, we decided to commit those resources,
particularly the intellectual capital into the arenas that we are interested in.
SH: So, what is your business model?
Howard: We have really become a total resource Internet commerce-based organization. We've combined extraordinary
technologies developed by Microforum in the way of the ECS Commerce Suite with an exceptional marketing services
organization, which is long in the tooth vertically, with regard to having physical distribution - 800 number inbound and
outbound call-centers, database management, strategic development, contest incentives, and all in-house. We see
e-Commerce not as a stand-alone business, but as an extension of, and addition to, the marketing arsenals of how some
people retail, of how some people wholesale, some people use direct mail, some people sell things over the television. It's
just another vehicle for the distribution of products or the dissemination of information. Because we are a full-service marketing
organization, we saw the necessity of adding e-Commerce to the process. What we discovered is that what we do on the
conventional side is as much in demand as on the electronic side. And so we have become a total resource Internet-based
communications organization.
SH: Your last three "new business" news releases indicate a expansion into diverse, complete dis-related fields. Why?
Howard: They are not unrelated at all. From the perspective of e-Commerce and marketing, they are not diverse at all. In a
traditional advertising agency, it may have an automotive client and it may have a retail fashion client. What's the difference
for us?
SH: Are you trying to become an Internet advertising agency?
Howard: Not at all. What we are doing is providing e-Commerce solutions. Donna Karan has as much interest in having their
products represented in an e-Commerce environment as much as SONY music does. For us, the product is not relevant. It is
the technology that delivers. That's the important part. After that, it's the creative that sits on top of it - the pretty pictures that
make people want to buy there. We also have a great expertise as a result of our advertising agency and our public
relations organization. It is not unreasonable that if we have the technology and that we can give them end-to-end solutions.
Hey, this means that not only can we give you the marketing vehicle, but we can show you how to use that marketing
vehicle. So, why wouldn't the company here as opposed to having three or four organizations do the same thing. In other
words, anything that is required, that falls under the purview of the vice president of marketing, which relates to e-Commerce
solutions, and that is all under one roof is what Microforum is about. This is all people that work for us, who are employed by
us. We're not out-sourcing bits and pieces. We're not a small backyard shop. This is a real business. We are working in the
conventions of normal marketing milieu.
SH: Are we going to see a new generation of the highly successful iFront ECS Commerce Suite?
Howard: Oh, no question. The product will continue to evolve. That's all I can say about that. We are involved with
Microsoft, as provider partners. We are involved with what's happening with Site Server 4 and our relationship with
Microsoft is a good one and a solid one.
SH: Your last financials came out at the end of October. When is your next report?
Howard: The next revenue and earnings statement should come out in the next three to four weeks. We've got some
interesting things to report and obviously I can't comment on that. For instance, I haven't got financials for the quarter that
have yet been approved by the board. Let me put it to you this way: It is our intention to continue growing at a pace for
which we have the capacity to perform admirably. We are not interested in garnering business beyond our capacity to
service. We are an ISO shop and we believe in excellence in execution. As we can add the intellectual capital to support the
business we bring in the door, we will continue to add new business. We are not anywhere near capacity at the moment. I
don't think that any number I could give you would make any sense, other than we have room to grow.
SH: Thank you, Mr. Pearl
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