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Technology Stocks : Network Solutions (NSOL) -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Big who wrote (945)	4/20/1999 8:04:00 PM
From: MoonBrother	Respond to of 1377

08:41am EDT 20-Apr-99 J.P. Morgan (ARCHIBOLD, R. (1-212) 648-6231) NSOL NETWORK SOLUTIONS: EARNINGS PREVIEW; EXPECT ANOTHER STRONG QUARTER April 20, 1999 J.P. MORGAN SECURITIES INC. - EQUITY RESEARCH RAIMUNDO C. ARCHIBOLD JR, CFA (1-212) 648-6231, archibold_raimundo@jpmorgan.com John Reilly Walsh, CFA (1-212) 648-8028, walsh_john@jpmorgan.com Network Solutions (BUY) EARNINGS PREVIEW; EXPECT ANOTHER STRONG QUARTER AND CONTINUED OPPORTUNITIES Earnings Per Share P/E NSOL 52-Wk ------------------------ --------- MkCap 4/19 Rge 12/98 12/99E 12/00E 1Q/99 1Q/98 12/99E 12/00E Yld ($MM) ---- ----- ----- ----- ----- ----- ----- ---- ---- ---- ----- $70.50 $153-11 $0.34A $0.62E $0.88E $0.12E $0.06A 113.7 80.1 0.0% 2,453 Note: NSOL's shares split 2 for 1, effective after market close March 23, 1999. Our reports and models are now available on the JPMS morganWISE website. Please contact your JPMS salesperson for more information. Network Solutions is expected to report its first quarter financial results on April 22nd before the market open and hold a conference call at 11am EDT that morning. Our revenue estimate for the quarter is $35.2 million, a 113% increase versus the same quarter a year ago and 12.5% above last quarter. Our $0.12 EPS estimate is in-line with consensus and is double the $0.06 reported in the same quarter a year ago. The March 15th announcement NSOL has registered its four millionth domain name gave us a good preview of a strong revenue quarter with registrations likely to exceed our expectation of 620,000 for the quarter. Our investment thesis remains: Network Solutions will maintain its dominant position in the domain name registration market for the foreseeable future, investors should look past the governance cloud to see the value in NSOL's business model and the opportunities ahead for this Internet savvy enterprise. We reiterate our Buy rating and $150 price target on NSOL as we believe the shares offer investors a unique vehicle to participate in the growth of the Internet. On April 21st at 10 am EDT, ICANN is expected to announce the five testbed registrars. We believe the five testbed registrars will be comprised of both international and domestic entities and be either independent registrars or Internet Service Providers (ISPs). ICANN has also indicated it would post a list on the Internet of all applicants upon announcement of the testbed. We believe ISPs will have encounter channel conflicts offering domain name registration outside its customer base and independent providers' breakeven is probably around 500,000 names. We believe ICANN could indicate these registrars will be included in the next phase of implementation which is currently scheduled for June 25th. Upon announcement of the chosen testbed registrars, each must work with NSOL to integrate its systems to communicate with the SRS established by NSOL. We believe NSOL will meet the specified April 26th date to have the SRS available but would not expect integration with the testbed registrars for thirty days or more from the April 21st selection date. We believe investors should be aware of the potential for political posturing during this phase of competition introduction as to any possible delay in getting the testbeds running. Logic would indicate the registry fee NSOL would receive from the new registrars would be announced prior to the testbeds being announced, we believe if the registry fee is not announced prior to April 21st, it will be announced shortly thereafter. We believe NSOL will be able to maintain its current growth trajectory by leveraging its formidable distribution channel encompassing over 5,000 partners and new entrants will serve to extend the market. Negotiations with the Department of Commerce on Registry Fee: Network Solutions and the Department of Commerce (DOC) continue to negotiate the fee NSOL will receive from new registrars in its capacity to act as the sole registry for .com, .org and .net. in an agreement that currently extends to September 30, 2000. Network Solutions has initially proposed a $16 fee, we believe it is reasonable the registry fee will ultimately be between $8-10 per name per year but a fee under would not be alarming as it would indicate to us the projected growth in registrations was higher than originally projected. Remember, NSOL will operate the registry on a cost plus reasonable return basis and cost to build and operate the shared registry needs to be spread over an estimated revenue (i.e. number of registrations). It is important to realize NSOL must build a commercially viable shared registry system (SRS) with full redundancy, security, authentication procedures, offsite backup etc. as well as ongoing supporting operating costs. Importantly, the NSOL's registry business allows them to participate in the growth of the Internet by sharing a piece of every domain name issued in .com, .org and .net. Directory Services - We believe NSOL's upcoming directory services offering will be positioned as the de facto yellow page on the Internet. The directory services offering has the potential to leverage NSOL's existing customer base by selling them additional services. Moreover, it could be NSOL's first advertising based revenue opportunity. Yesterday's announcement to partner with InfoUSA.com who has information on both online and physical world merchants was an indication of the potential of the breadth and depth of information which can be provided. Other partners announced yesterday to build the directory services offering include: Looksmart, VeriSign, GTE (GTE/$66/Buy) and Vicinity. CEO Search - The company has indicated the search for a new CEO is going well and are pleased with the candidate finalists. We expect the new CEO to be announced within the next 30 days and an update from the company on the progress made to date on the call.

To: Mr. Big who wrote (945)	4/20/1999 9:13:00 PM
From: Gary Wisdom	Read Replies (3) \| Respond to of 1377

Banc Boston recommended buying NSOL before the open today (see below). Doesn't it make anyone wonder that these guys have been pumping the stock as it's been cut in 1/2 in a week? Either they have major egg on their face or they're pumping AND DUMPING. Today's volume was huge with over a million shares traded the last 30 minutes. I still have my shares but am really wondering whether we'll fall further before we start seeing decent levels on this stock. BancBoston Reiterates Strong Buy On AOL, Amazon>AOL NEW YORK (Dow Jones)--BancBoston Robertson Stephens Inc. analyst Keith Benjamin reiterated his strong buy ratings on America Online Inc. (AOL) and Amazon.com (AMZN) Tuesday morning. During the investment bank's morning meeting at 5 a.m. EST, Benjamin also highlighted Lycos Inc. (LCOS) and Network Solutions Inc. (NSOL) as buys. Some market players cited Benjamin's comments as one of the reasons for some of the stocks' recovery Tuesday. In recent trading, America Online was up 12 1/2, or 10.8%, at 128 3/8. Amazon was up 11 1/16, or 7%, at 170, and Lycos was up 3/4, or 1% at 76 1/2. Network Solutions was off 4 3/4, or 6.7%, at 65 3/4.