15 Solid Reasons to Buy MSGI now.
Prior to May 15th MSGI closed with CMGI on CMGI's treasured CMG Direct division to MSGI and then also took a 10% stake in MSGI. In addition, CMGI sent one of its Internet visionaries, Ed Mullens, over to MSGI to become MSGI's new President. Here are solid reasons to buy MSGI now:
1. Explosive growth in direct & Internet marketing industry, $205 billion by 2001 ($153 billion in 1997)(See Zack's report on MSGI for more details; see also CMGI's home page news/facts @ msginet.com);
2. Industry is very fragmented market with no powerhouse leader, YET; (As is quite obvious, MSGI is actively pursuing consolidation with, already, the likes of Stevens-Knox, CMG-Direct, Grizzard Comminications, Screenzone, Greatergood.com). The infomediary who becomes dominant in this market may have a $20 billion market cap within 5 years)(Don't underestimate the value and power of the next dominant "infomediary");
Read "Net Worth" by John Hagel. amazon.com. MSGI is, in my opinion, poised to be that next great infomediary. At the heart of Hagel and Singer's solution is the "infomediary" that sits between the customer and vendor. For the consumer, the infomediary acts as a trustworthy agent who knows the needs and habits of the client. For the vendor, the infomediary is the holy grail of consumer behavior, a marketer's dream. The infomediary brokers client information to vendors in exchange for goods and services for the consumer. The result? Happy consumers, satisfied marketers, and a very lucrative business model that awaits those entrepreneurs and companies that are bold enough to embrace the idea. The authors painstakingly outline the challenges and opportunities of developing an infomediary business and peg the potential market cap of a dominant player at $20 billion by its fifth year of operation. This is us; this is MSGI.
3. MSGI's revenue has grown from $16 million in 1996 to $100+ million (annualized for 1999) MSGI's revenue grew 120% from 1997 to 1998 - this is explosive and MSGI has just begun; MSGI's almost 120% increase in revenue does not even consider the new revenue to be generated from the Stevens-Knox biz.yahoo.com; CMG Direct acquisitions biz.yahoo.com; and the Grizzard Communication acquisitions biz.yahoo.com (Once MSGI completes the Grizzard acquisition, it will be a $200+ revenue company on an annualized basis);
4. MSGI has now moved to the Nasdaq Nat'l Market within next. Regarding moving to Nasdaq National Market: - this will help make the stock options eligible in time. This increases demand for the stock in the long run.
5. MSGI will become a $250+ million company this year (there will be more acquisitions and growth, J. Barbera has said so and already we have seen its latest target announced: Grizzard Communications biz.yahoo.com, which will make MSGI a $200+ revenue company on an annualized basis. We have also seen, within the last month, MSGI take minority stakes in two internet companies, (i.e., Screenzone biz.yahoo.com and Greatergood.com biz.yahoo.com ). I believe Barbera will over deliver on this goal for a $300+ million, and MSGI's new President (who came from CMGI) responsibilities will include mergers and acquisitions. biz.yahoo.com );
6. MSGI will get major (well known) analyst coverage very soon now that it has its NMS listing(stock will jump 5 - 10 points on this news, imho);
7. MSGI has two very credible strategic investors who have a clearly defined track record of investing in winners, they are: CMGI with 10% and GE Capital with 22%;(These investors will deliver more business and revenue to MSGI's doorstep, and GE is already doing this. Just look at MSGI's customer list in its most recent annual report. Also, CMGI will assist in management and business strategies going forward.
8. MSGI will close the Grizzard Communications on or before October 15, 1999. This will result in another Press Release further emphasizing MSGI's acquisition of the 6th largest direct marketing company with a major presence in the South (Atlanta);
9. MSGI is still virtually undiscovered bc/ due to its only, as of July 26, recently being listed on the NMS. No analyst coverage to speak of exists but it will soon be initiated, imho.
10. MSGI only lost .37 last year on $51 million revenue. .31 of that loss was attributable to an non-recurring interest payment to GE Capital and approximately .02 of the loss is attributable to MSGI's MFI division which was spun-off majority interest)http://biz.yahoo.com/bw/990401/ny_msgi_1.html.
11. Along these same lines, EPS for 1998 reflected the same record-setting trend: a $2.48 improvement to end the fiscal year (1998) at a loss of .37, which consists of .31 loss associated with the GE-capital transaction and .06 was associated with operations (also, in its most recent earnings (2nd Qtr. 1998) MSGI posted only a .14 loss compared to a loss of .33 for the same Qtr. a year ago - an improvement of 58%) It is very conceivable for MSGI to turn the corner to profitability this year based on its improvement from 1997 to 1998; Net loss for 1998 was better than that in 1997 by an impressive $4.5 million;
12. MSGI has now forced GE Capital to convert its preferred shares to 4.8 million common shares, and GE is remaining on the BOD and is not selling. biz.yahoo.com This means MSGI will not have to make any more interest payments to GE Capital. (Remember that .31 cents from last year.) MSGI should be headed straight towards profitability, which is almost unheard of for a company like this that is this young and enlarging its Internet involvement and presence. (Compare DCLK). (Also, GE's conversion did not have any dilutive impact on MSGI's EPS because MSGI had been including the GE preferred shares in their EPS ever since GE became an investor in Dec. 1997).
13. A somewhat different yet very similar and comparable company is DCLK which is enjoying a market cap. of about $4 billion. MSGI for 1999 (on annualized basis) will generate more revenue than DCLK and 5x closer to making a profit than DCLK. (DCLK's growth rate isn't as great as MSGI's, and DCLK is going backwards relative to its profitability.) MSGI's growth is incredible (with two back to back qtrs. of 50+% growth in revenues) and will grow even more rapidly from here - in my opinion. CMGI only selects and invests in companies with EXPLOSIVE growth. This is what MSGI has show and will continue to do, imho. In the past 5 months, alone, MSGI has signed significant revenue producing deals with new clients: BreathAsure biz.yahoo.com; Broadway Giant biz.yahoo.com, and American Theater biz.yahoo.com; Levis and FedEx biz.yahoo.com; National Securities biz.yahoo.com; and Datek Online biz.yahoo.com, and partnership with iCom biz.yahoo.com;
14. Excellent management to boot, which explains why MSGI was invited to be a presenting company at the 1999 Alley to the Valley Conference a few weeks back in March of 1999 in San Francisco. alleyvalley.com (And again, Ed Mullens of CMGI will further enhance MSGI's management team beginning May 15, '99).
15. If MSGI is good enough for the likes of CMGI, who has taken a 10% stake in MSGI then you can be sure that MSGI is looking for a 10,000+ percent return, not just a $60 - $70 point gain. Think about it. If MSGI becomes a major player with a marketcap of $5 billion or the "dominant player" with a $20 billion market cap in 5 years, then we're looking at a range of $425 to $1525 stock in 5 years.
Do you now understand the huge potential here - the potential that CMGI recognizes? This company is still but an infant, imho. |
