.."these people are at the top of their game "-Holmes on Modem Media.
Pete:
I haven't checked the numbers,but yours seems accurate enough.
Now here is another write-up on on MMPT by CBS MarketWatch,I see good prospects for this company and the stock in particular.
Takeover Candidate?? Well perhaps,here is what Merrill Lynch says of the segment in general..
.."In a recent research report, Merrill Lynch analyst Lauren Rich Fine said $2 billion will be spent on online advertising in the year 2000, as opposed to about $906 million in 1997. Fine wrote that she believes many of the interactive agencies will be scooped up by the full-service firms."..
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Modem Media surges on debut
By Darren Chervitz, CBS MarketWatch
Last Update: 3:24 PM ET Feb 5, 1999 Internet Stocks
NEW YORK (CBS.MW) -- Modem Media Poppe Tyson surged 156 percent above a higher-than-expected $16 offering price on its U.S. stock market debut Friday as investors continue to pour into Internet-related new issues.
The Westport, Conn.-based interactive ad agency priced its 2.6 million shares at $16, above the original $11 to $13 range listed in the company's earlier IPO filings.
Shares (MMPT) opened for trading at 51 -- the price at which most investors were able to buy the stock -- and rose as high 55 1/8 before succumbing to heavy selling. The stock was at 40 after 2 million shares changed hands.
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More on Modem Media
Modem Media, a spin-off of True North Communications (TNO), experienced fairly rapid growth in the first nine months of 1998, with sales rising 69 percent to $30.1 million. Profits, however, remain elusive. The company lost $2 million during that time frame, about even with the year-ago period.
Both Modem Media and Poppe Tyson attempted and failed to go public as separate entities. The two companies merged after True North bought Poppe Tyson's owner, Bozell Worldwide.
The combined company is one of the clear leaders in the fast-growing, fragmented and increasingly competitive interactive ad agency industry, said Mike DeNunzio, chief executive and co-founder of Four Points Digital, a Chicago-based interactive ad agency.
DeNunzio wrote the interactive ad business plan for the Chicago office of True North's Foote Cone & Belding before starting Four Points.
Other notable rivals include USWeb/CKS Group (USWB) and Razorfish, which filed for an IPO in January. For a list of the top 50 interactive ad agencies, click here.
Ben Holmes, analyst at ipoPros in Denver, pointed out that Modem Media's 1998 sales were about three times the number recorded by Razorfish. "Basically, these people are at the top of their game right now," Holmes said.
Not only would a Modem Media successful market debut be good for independent folks like Four Points, Razorfish and agency.com (Omnicom (OMC) has a stake in Razorfish and agency.com), it could also spur other major traditional ad agencies to spin off their interactive divisions, DeNunzio said.
A growing industry
Though estimates show that as many as 30 percent of Americans use the Internet, only about one percent of all U.S. advertising dollars were spent online in 1997, according to data from the Internet Advertising Bureau and Zenith Media.
DeNunzio said that will change as the Internet provides richer media experiences through high-speed access and as marketers become more savvy about using direct marketing techniques.
"Owning relationships with customers is one of the things that the Internet affords marketers that really no other medium can provide on a cost-effective basis," he said.
In a recent research report, Merrill Lynch analyst Lauren Rich Fine said $2 billion will be spent on online advertising in the year 2000, as opposed to about $906 million in 1997. Fine wrote that she believes many of the interactive agencies will be scooped up by the full-service firms.
The company has done projects for 3Com, John Hancock, JC Penney and Intel. Like many ad agencies, customer concentration is a concern; AT&T and Citibank accounted for more than 32 percent of Modem Media's sales during the first nine months of 1998, and the top 10 clients accounted for more than three-quarters of sales.
"We all have clients that if they were not there the next day would represent a serious problem," DeNunzio said. "You'll lose clients, but there's a tremendous opportunity to make them up [with new ones]."
True North relationship
The company often does business with clients on an assignment basis, meaning short-term contracts that can often be canceled without much notice.
"While Modem Media is not aware of plans by any of its significant clients to terminate their use of Modem Media's services, the termination of Modem Media's business relationship with any of its significant clients ... could have a material adverse effect on Modem Media's business, financial condition or results of operations," the company says in the prospectus.
Modem Media also created the Internetstocks.com Web site for BancBoston Robertson Stephens Web analyst Keith Benjamin. Robbie Stephens is the lead manager in charge of the IPO.
After the offering, True North will own about 5.65 million class B common shares, totaling 53 percent of Modem Media's equity and about 85 percent of the voting power.
True North, whose stock fell 6.4 percent Friday, has a market cap of $1.3 billion, excluding debt or outstanding options; its stake in Modem Media is valued at about $270 million.
cbs.marketwatch.com
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