Internet Marketers: Think New Ideas Vs. CKS Group

While investors have seemingly done nothing but Think New Ideas
(NASDAQ:THNK) of late, we wonder if they’ve done any real thought at all?
Rival Web marketer CKS Group (NASDAQ:CKSG) trades at what looks like a
substantial discount, THNK’s price-to-earnings of 123 vs. CKSG’s 33 basis
by our estimates.


In the furor of trying to find the “next big ad or marketing” Internet
stock, THNK has run from under $10 to more than $30 in barely a month.
Meanwhile, recall that CKSG, which traded at more than $45 six months ago,
still hasn’t fully recovered from the haircut it took back in November. CKS
plunged under heavy “G” force more than 60% in one day to about $14 per
share amid weak earnings.


Given that thorough flogging, it’s no wonder that Wall Street’s once bitten,
twice shy about CKS. But with all the interest in THNK and Internet ad firm
Doubleclick (NASDAQ:DCLK), perhaps it’s time to look at the numbers:


Internet Stock Report Spotlight: THNK Vs. CKSG








































































































































 

Think New Ideas

CKS Group

Percent

 

NASDAQ:THNK

NASDAQ:CKSG

Difference

latest quarter data

as of 12/31/97

as of 3/1/98

CKSG vs. THNK

 

 

 

 

Diluted shares outstanding

8.29

16.00

93%

Share price April 6

$ 29.44

$ 21.38

-27%

= Market capitalization

$ 244.16

$ 342.02

40%

Current assets

$ 26.82

$ 86.79

224%

– Current liabilities

$ 19.40

$ 36.58

89%

= Working capital

$ 7.42

$ 50.21

577%

Enterprise value

$ 236.74

$ 291.81

23%

 

 

 

 

Revenue for latest quarter

$ 10.07

$ 32.19

220%

Net income

$ 0.47

$ 1.11

134%

Basic EPS

$ 0.07

$ 0.07

0%

 

 

 

 

Annualized revenue at latest Q

$ 40.27

$ 128.76

220%

Forecast fiscal EPS

$ 0.24

$ 0.65

171%

 

 

 

 

Multiples

 

 

 

Market cap/Revenue

6

3

-56%

Price/Earnings

123

33

-73%

all figures in millions, except share price and multiples


For the latest reported quarters, CKS appears to have reasonable revenue and
earnings. Note, however, that 25% are from new media. Meanwhile, Think just
agreed to acquire Seattle’s Herring/Newman for $3 million, $400k of which
was in cash and the rest in THNK shares.


Herring/Newman is an integrated marketing outfit with $55 million in
billings. Clients include Hewlett-Packard and Westin Hotels. We don’t show
pro forma shares or include this in the estimates above.


Perhaps the acquisition provides some insight into why investors fuel
THNK–it’s on the hunt, rolling up leading new media/Internet era marketing
firms aggressively. It builds Web sites for such well-known firms as Oracle
and IBM. Also helping THNK’s rise was a tout from Volpe April 1 with
“strong buy.”


But our analysis shows that CKS simply may be downbeaten and it’s own blue
chip clients forgotten. CKS clients include: Excite (NASDAQ:XCIT), Apple
(NASDAQ:AAPL), McDonald’s, Internet Shopping Network, Pixar, and Starwave.


Perhaps it’s worth a thought?

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