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To: Panita who wrote (66227)	4/5/1999 3:42:00 PM
From: Trader J	Respond to of 119973

NSOL - From the NSOL thread: This Just In! Two Analysts have given strong support to NSOL today!!! PainWeber analyst gives $195 target, while J.P Morgan analyst gives $150 target. The latter also directly attacked Asensio's inaccurate "report". I'm posting the analysts' reports below. Enjoy!!! --------------------------------------------------------------- 08:52am EST 29-Mar-99 PaineWebber (Preissler, James R. 212-713-2060) NSOL Network Solutions: Raising Est.; Competition Timeline Internet PaineWebber James Preissler RESEARCH NOTE 212-713-2060/preissj@painewebber.com Richard Choe, Associate Analyst (212-713-2415) March 29, 1999 Thomas Bock, Associate Analyst (212-713-3186) Network Solutions Rating: Buy (NSOL-$106.50)(2,3) Network Solutions: Raising Est.; Competition Timeline KEY POINTS * We are raising our estimates to reflect faster than expected domain name registrations, now over 4 million. Note, it only took the company 4 months to gain the last million domain names, the first 1m took four years (see below). * Our revenue estimate for Q1 is $37 million, up from $34 million, due to greater than expected domain name registrations. Our EPS estimate goes to $0.12, up from $0.105 (split adjusted). For 1999, we are raising our revenue estimate to $174 million, up 10%, from $158 million and our EPS estimate to $0.56, up 12%, from $0.50. * Our 2000 revenue estimate goes to $266 million, from $241 million, and we are increasing our EPS estimate to $0.89, up from $0.82. * On March 25th, ICANN extended the application deadline for the five testbed registrars from March 29th to April 8th. According to ICANN, the five testbed registrars will now be announced on April 21st instead of April 12th. Normal registrar accreditation is to begin on June 25th. The application fee to be a testbed registrar is $2,500.00 and $1,000.00 for normal accreditation. * ICANN continues to plan on meeting the rest of its deadlines to introduce competition according to the original schedule. We believe competition will come close to the announced schedule, but with some delays. * Based on NSOL's cost, we expect it will keep $10 to $12 per domain name per year for the registry service (database), leaving approximately $25 per year for the registrar. * NSOL is negotiating with Department of Commerce, initially at the $16/year for registry. * We are reiterating our Buy rating and raising our price target to $195 based upon a P/E valuation of the core domain name registration business and incremental opportunities (see below for more details). Key Data Quarterly Earnings Per Share (fiscal year ends December) 52-Wk Range $144-13 1998A 1999E Prev 2000E Eq.Mk .Cap.(MM) $3,621 1Q $0.07 $0.12 0.11 Sh.Out.(MM) 34 2Q 0.07 0.13 0.12 Float 45% 3Q 0.09 0.15 0.13 Inst.Hldgs. 89.2% 4Q 0.11 0.16 0.14 Av.Dly.Vol.(K) 5,640 Year $0.34 $0.56 $0.50 $0.89 [Curr. Div./Yield None/NA FC Cons.: $0.33 $0.59 $0.92 Sec.Grwth.Rate 50% Revs.(MM): $94 $174 $266 12-mo. Tgt Price $195.00 P/E: 313.2x 190.2x 119.7x 12-mo. Ret. Pot'l 83.1% Convertible? No Exhibit 1 PaineWebber revised estimates New Old 1Q99 $0.12 $0.105 2Q99 $0.13 $0.115 3Q99 $0.15 $0.13 4Q99 $0.16 $0.145 Y1999 $0.56 $0.50 Y2000 $0.89 $0.83 Source: PaineWebber estimates. Exhibit 2 Cumulative domain name milestones and time to reach each one Domain Names Time 1m 4 years 2m 1 1/4 years 3m 6 months 4m 4 months Source: Network Solutions. COMPETITION TIMELINE FOR DOMAIN NAME REGISTRATIONS April 8th -- Application deadline for 5 testbed registrars. (originally March 29th) April 21st -- Announcement of 5 testbed registrars. (originally April 12th) June 25th -- Normal registrar accreditation deadline. WE ARE REITERATING OUR BUY RATING AND RAISING OUR PRICE TARGET TO $195, UP FROM $115 Network Solutions is a leading infrastructure provider, offering key services for the critical, high-growth service areas of the Internet. * We believe due to NSOL established market leader status, the stock could warrant a P/E as high as 220 on our 2000 EPS estimate, which produces a target price of $195. * Therefore, our price target is $195 per share and we are reiterating our Buy rating. If competition is less intense than currently anticipated, this may be a catalyst for raising our estimates going forward. We believe NSOL remains a leading investment vehicle as a pure play on the ongoing organic growth of the Internet. RISKS Like all software and Internet companies, Network Solutions competes in a highly competitive as well as rapidly changing and unregulated marketplace. Any failure in execution or government intervention could dramatically impact its revenues. In addition, the company could potentially compete with a number of larger competitors such as Microsoft, IBM, AT&T, Oracle, and others, who all have significantly larger resources, sales organizations, and customer bases.