Broad Enough Vision? Open Market Tops Marketshare, Who’s Buying Its Stock?

Despite being the leader in market share for Internet commerce software,
our analysis shows Open Market (NASDAQ:OMKT) trades at half the revenue
multiple of its number two, albeit marketing centric rival, Broadvision
(NASDAQ:BVSN). Reason? Earnings and losses.

First, Open Market’s stats: more than 2,600 businesses outsource Internet
commerce to service providers relying on Open Market’s solutions. This
includes all of
the top 10 commercial publishers, 11 of the world’s top 14 national
telephone companies, and six of the top 15 Internet domains, according to
the firm.

Meanwhile, Broadvision boasts some of its own blue-chip
customers of its One-To-One marketing/commerce-enabling software including
Cisco, American Airlines, Citibank and more. In the second quarter ending
June 30, it signed 24 new licensees. Just a month ago Broadvision.com was
named one of the top 10 in its field.

The market capitalization numbers
show that Broadvision gets the nod from Wall Street thanks to its ability
to squeeze a dollar into positive ground.

For the six months ending June
30, Open Market led in revenue with $32 million vs. Broadvision’s $21
million. Broadvision, however, beat Open Market in the same period with
$194,000 net income vs. Open Market’s net loss of $22 million. Check the
snapshot:

For the June quarter alone Broadvision posted $693,000 net income while Open Market posted $16 million net loss (with acquisition-related charges). Excluding those losses, Open Market’s loss would have been $5.2 million, or $0.16 per share.

Against those ups and downs, Dataquest reported Open Market’s share of the commerce software market at 30% vs. Broadvision’s 8.4% share. Netscape and Microsoft fared even further down the list from Open Market.

Open Market also has put together an
assortment of commerce service providers who use its platform. The names
include AT&T, BT and UUNET UK. It also acquired ICentral-ShopSite, aimed at
e-commerce software for small-to-medium businesses.

In short, Open
Market’s been busy wrapping alliances and partners around its software, and
consolidating future customers.

So how much of that market share and movement are investors willing to
believe may translate into earnings some day for Open Market? Maybe little
yet.

We believe the market for commerce software is big enough for several
firms to prosper, especially in 1999 and beyond as businesses and consumers
increasingly migrate to the Web.

Having established the beach head with
a dominant position weighs in Open Market’s favor in retaining clients as
they progress up the e-commerce food chain, with sales reaching into the
billions of dollars-range globally.

As e-commerce sales and targeted
marketing software and services needs escalate, both OMKT and BVSN could fare
well if they continue to provide the level of quality and service to a
fast-growing segment, and as commerce and marketing blend further.

Bottom line: September 21 OMKT at $10 per share traded just off its
52-week low of $8.50 per share and well down from its $29.125 per share
high.

Meanwhile, BVSN closed September 21 at $19.375, well up from its
$5.875 low and off somewhat from its $29.50 high. The tale tells the
story of these two e-commerce stocks on Wall Street, with mixed buyers and
sellers. Some pay retail, others pay wholesale.