I encourage all newbies and longs looking for old, but good news, to access this URL from abovenet's website in their DD about ABOV:
above.net
Here is one nugget that all will enjoy to read.
AboveNet connects with Web, investors
By Jeffry Bartash, CBS MarketWatch
Last Update: 12:12 PM ET Mar 19, 1999
Internet Daily
Net Headlines
NewsWatch
WASHINGTON (CBS.MW) -- AboveNet Communications soared
again Friday, and no wonder: It's the Internet service provider
for increasingly busy Internet service providers.
Well, not exactly, but you get the idea.
AboveNet (ABOV) basically helps ISPs
connect more efficiently to each other and
to companies that provide content over the
Web. Its goal is to minimize information
loss, speed up data exchanges and relieve
web congestion, and reduce the cost of
access to the so-called Internet backbone.
AboveNet is enjoying such prosperity
these days -- at least in the minds of
investors -- because its one of the few
companies to offer such services. It's also
is moving quickly to capture the business of companies in
Europe and Asia as web-site development catches on, a
particularly lucrative opportunity in light of how small those
markets are now.
While the 3-year-old company only tallied $3.4 million in
revenue in 1998, analyst Bill Garrahan of Lehman Brothers
estimates it will record sales of $21 million in 1999, $60
million in 2000, and $137 million in 2001.
Earlier Friday, Garrahan initiated coverage with an
"outperform" rating. That helped boost shares of the company,
which went public in December, by 14.5 percent. It jumped 7
9/16 to 59 3/4, about six times above its all-time low of 11
1/2. Its closest competitor, Exodus Communications (EXDS),
soared 14 7/8 to 141.
While analysts acknowledge that AboveNet, like most
money-losing Internet-related concerns, is exorbitantly valued,
Garrahan points out that its trades at a reasonable 6.5 times
2001 projected revenue.
"It's clearly in a great space," he said.
"Revenue is going to grow in proportion to
the Internet."
Central command
AboveNet, founded by former Ace
Computer salesman Sherman Tuan in
February 1996, is carving out a nice niche
for itself. The company earns most of its
money two ways.
First, it rents space in several
communications- control centers, called
Internet Service Exchanges, where ISPs and
web-content providers can put their own
equipment. It then provides high
bandwidth and allows customers to
exchange data directly, quickly, securely
and with fewer errors.
For example, Real Networks (RNWK) uses AboveNet to speed
up download time of its RealPlayer device, which PC users
utilize to see and hear multimedia files.
Already, the San Jose, Calif.-based company has signed up
nearly 70 U.S. Internet service providers to locate their
equipment ins its exchanges. More than 200 others have direct
connections to AboveNet's sites. "We are directly linked into all
the major ISPs," said spokeswoman Rose Marr.
In addition, AboveNet acquired access to a transatlantic
high-speed cable and opened a site in London to allow
European ISPs to connect more easily and cheaply to the U.S,
which accounts for about 90 percent of all Web traffic. Major
Asian ISPs, meanwhile, own their own undersea cable to the
West Coast, and hook in to AboveNet's exchange in California.
Though the company has a unique business model, it's not the
only one providing the kind of services it does. Aside from
Exodus, other rivals include AT&T (T), MCI WorldCom's
(WCOM) Uunet unit, Frontier Communications' (FRO)
GlobalCenter subsidiary and Verio (VRIO).
"You're going to see other, larger competitors like Qwest also
getting into this area," said John Hodulik of PaineWebber, who
covers internet-backbone companies.
Still, he and other industry observers believe there is enough
money to go around. "There's room for a lot of players in
this," concurred Garrahan, likening the young but fast-growing
sector to the long-distance phone business.
Another advantage AboveNet possesses is that it does not
compete with ISPs for end users -- small business customers,
for example, who want high-speed access. As a result, ISPs
may be more likely to sign up with AboveNet instead of an
AT&T, which could try to steal its customers.
Perhaps the biggest concern among financial analysts right
now is whether the company can handle the kind of hyper
growth Wall Street expects it to achieve. For now, though,
those worries are small.
Sums up Hodulik: "AboveNet is an up-and-comer in the Web
co-location business. It's an interesting stock that's going to
grow as the Internet does."
Miller |
