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Technology Stocks : USWeb (USWB) -- Ignore unavailable to you. Want to Upgrade?

To: Racso who wrote (813)	4/29/1999 12:07:00 PM
From: SMALL FRY	Read Replies (1) \| Respond to of 1188

Racso, CATP is also faced with multiple litigations for misleading their investors during the last earnings report (3/18) that caused the huge drop... in that light I really wouldn't call it that attractive since they pretty much slapped a lot of people and the Street does not forget... it's the least attractive of the two IMO. Regards, SF

To: Racso who wrote (813)	4/29/1999 12:11:00 PM
From: Rick	Respond to of 1188

Racso - You are gravely mistaken if you believe that USWB has revenues per employee of $895,000. I think your wires are crossed. Anybody that wants to do the calculation, based on whatever period and whatever source of financial data: Valuation Per Employee = Total Market Capitalization / # of Employees Revenue Per Employee = Total Revenue / # of Employees The result that I calculated several days ago shows USWB valuation around 6 times CATP. Why is this important to me ? 1) The employee is the inventory. It has a price tag (Salary). It is sold to customers for a price tag (Fees). In order to make lots of money you need Fees to be more than Salary. The difference between Fees and Salary is your Overhead and Profit. Taking it one step further, If I can pay $ 200,000 per employee for CATP's stable of employees, and each generate revenues of $ 148,000 (let's assume it's the same as USWB), or, I can pay $1,200,000 per employee for USWB's stable of employees, and each generate revenues of $148,000 Which is the better investment ? In order to choose USWB as a better investment, you must be: 1) working on the greater fool theory of investing hoping a greater fool than you will buy the company for more than you paid, or 2) believe that USWB has such greater opportunities and advantages in the future than CATP. Your final point about comparing it to the Internet universe is exactly the investing fallacy that many are making in trading USWB as an internet stock. My investment perspective in this industry is this: 1) I don't care whether your programmers are doing Y2K, ERP, Web Sites, e-commerce, or whatever. All of the firms are, or will be, chasing internet related business. This is simply another area of the MIS department - yes, it's new, yes, it's exciting, but when you get right down to it, it is just another part of a businesses systems infrastructure. 2) The much more important driver of valuations in this business is the fundamental services model, which is that the employee is the inventory, you sell it to the customer for a fee, and collect the difference. The reason it's hard to make lots of money (compared to software or manufacturing), is that additional unit sale comes with a high variable cost price tag with it called salary - It's a bummer, but it's a fact, and if you buy these stocks without understanding this unfortunate fact, you will be burned. Contrast this with a product company, where once your sales meet your fixed costs of product development, each additional sale goes directly to the bottom line in profits. That's why software salespeople can be paid so much money after they meet quota - every additional sale is gravy. Why do you think USWB has recently announced or hinted about some kind of product related to a portal ? It's not too tough to figure it out - they realize that in order to make real money, you need to have a product that doesn't walk out the door at 5pm, fire off lawsuits if their workstation isn't ergonomic, takes 3 hour lunches, goes to work for your competitors but offers to stay for a king's ransom, etc. etc. Anyway, if you look at the services industry over the years, whether it's general temp firms or technology firms you will see that they are much better trading stocks than good long term investments. If you look at USWB's trading history you will also see that it has been a good trading stock, but not a good long term investment. Lot's of people have made money long, lot's of people have lost money long - perhaps someday it will prove to be a good long term investment, but I highly doubt it. Rick.

To: Racso who wrote (813)	5/17/1999 9:02:00 AM
From: Racso	Respond to of 1188

Mary Meeker of Morgan Stanley just initiated coverage of USWB with an "Outperform" rating and a $35 price target. Investment positives mentioned by M Stanley: -Large, fragmented market opportunity; - Unique electronic services offering which should asist in scalability; - Highly experienced leadership. In reference to investors' concerns, MStanley views are as followed: - All USWB's accounting is within GAAP guidelines; - USWB is positioned in the fastest growth segment within IT services, i.e. internet professional services, MS expects top-line growth to be just below 50% yearly from 1999-2001; - USWB's branch office, infrastructure and state of the art MIS systems afford the company a competitive advantage as it scales; - Acquisitions are being increasingly used to gain scale, skill sets and geographical presence. MS also says that USWB's future top-line prospects depend significantly on the company's ability to attract, train and retain skilled software developers, project managers, creative artists and strategy/business consultants. MStanley estimate for EPS long term growth is 40%. This report should clearly add strong momentum to the recent price improvements.