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Technology Stocks : OneMain.com (ONEM) -- Ignore unavailable to you. Want to Upgrade?

To: kathyh who wrote (69)	3/28/1999 12:56:00 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 614

Kathy, your math and your logic are impeccable. I was surprised by the violence of Friday's sell off, though it did provide me with an opportunity to get in at 33 3/4. IMHO, the market should be valuing ONEM at approximately $2,500 per customer. If you use the 12/31/98 numbers, that would put the valuation at approximately $39.50 per share. There are probably two main areas that are of concern to shareholders. The first is the challenge of assimilating 17 disparate entities under one corporate roof. This process will probably take the better part of two quarters. The second area of concern is probably the complexity of the transactions between ONEM and the 17 ISPs and the uncertainty associated with the contingent payments that will be due to the former owners. I have not had a chance to look at these transactions in detail though I suspect that the analysts will have a pretty good handle on them by the end of the quiet period. Additionally, there may be some concern about the pro forma financial statements and the massive goodwill expense. I am not concerned about the pro forma statements or the goodwill expense. The company will probably break even on a cash basis during the first quarter and the goodwill, which arose because of the fact that the contingent payments prevented the company from accounting for the acquisitions on a pooling of interest basis, will be written off in three years. I would expect the stock to move back up into the upper 30s and, assuming that the market or the sector do not correct, the mid to upper 40s is very possible when the first analyst reports are released. ONEM seems to have picked off some of the fastest growing ISPs in the country. For those who have not had an opportunity to review the S-1, here is a recap of the number of customers that ONEM had at the end of the last eight quarters: 3/31/97: 91,413 6/30/97: 105,364 9/30/97: 129,029 12/31/97: 158,204 3/31/98: 198,495 6/30/98: 235,742 9/30/98: 278,995 12/31/98: 331,849 To put this in some sort of perspective, I believe that Flasnet increased its number of customers by only 10,000 (from 170,000 to 180,000 during the fourth quarter of 1998). Regards, Glenn