eMailbag: Engage, 7 Elements, High Speed, China.com
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First reader up writes: "I am the CEO of a regional ISP and have been frustrated by the lack of focus on the local and regional aspects of the Internet, in press coverage of the sector.
There are currently about 6,000 local or limited regional ISPs in the U.S. and they have a substantial percentage of the market share in the ISP business. Where do they fit in your seven essentials of Net Investing?"
Reply: Great point. My seven elements apply to regional and local Internet players if you consider them in the context of their markets. The access revenue from local ISPs accounts for a substantial precentage of all access revenue.
It is worth noting that there are thousands of local ISPs (see internet.com's theList.com for an ISP list). Also, Penton's Boardwatch magazine is a good source for ISP business.
For those of you who missed the seven elements report please see ISR Morning Report, Friday, July 9.
Engaged Or IPO Connection?
"Dear Steve, I would like to know your opinion on the upcoming IPO of Engage Technologies. Being a CMGI shareholder I have the opportunity to purchase shares, and I was just wondering about your evaluation of the company."
Reply: Engage appears to be one of the best firms coming out of CMGI's portfolio. Engage delivers targeted ad and commerce via profiling. Think 24/7 (NASDAQ:TFSM) meets DoubleClick (NASDAQ:DCLK) meets Broadvision (NASDAQ:BVSN). About $9 million revenue for the nine months ending April 30.
High Speed Access
"Steve: I'm current holding Winfield Capital Corp. and Premiere Technologies. Both seem like very undervalued stocks right at the moment. Would appreciate your thoughts."
Reply: Winfield (NASDAQ:WCAP) has had some success as a closed-end fund firm while Premiere Technologies (NASDAQ:PTEK) boasts unified Web-based messaging. WCAP to me is a small player in the Web investing space while PTEK posted $112.8 million in first quarter, with $25 million loss.
Of the two PTEK looks undervalued to me while WCAP depends on its investment prowess--I'll wait longer to see what it does.
Think Global, Act Global
"Steve, what do you think of China.com's upcoming IPO?"
Reply: Japanese, Asian, European and Latin markets heat up to varying degrees. I think the Chinese market is very nascent. But Hong Kong has promise as a center point of the Chinese Internet capital.
Despite more than 1 billion Chinese, many of them don't have PCs or Internet access. Culturally the market is huge but socio-politically the market hasn't taken off (yet).
Is China.com a winner? The thinking may be that it could be the 'StarMedia' of China. As far as the Chinese market goes I expect it to start maturing in the next 5 years. In 10 years it could be more than 50 million people.
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