This Is Not Your Father’s ISDEX

The beginning of the new year has brought some significant changes to internet.com’s Internet Stock Index, or ISDEX. To meet our goal of making the 50-member ISDEX reflective of the larger Internet economy, we’ve removed 11 companies from the list and replaced them with 11 others.

Coming off the ISDEX are:

  24/7 Media 
  Aether Systems
  Allaire 
  Ariba 
  eToys  
  marchFIRST 
  priceline.com  
  PSINet 
  SportsLine.com 
  StarMedia Network 
  WebMD   

Here is a list of the newest ISDEX members, followed by short descriptions of each company:

  Art Technology Group  
  Asia Global Crossing  
  CacheFlow  
  Commerce One 
  Hotel Reservations Network 
  Multex.com 
  Palm 
  Razorfish 
  Red Hat 
  Research In Motion
  Sapient  

Art Technology Group

Based in Cambridge, Mass., Art Technology Group sells e-commerce software, focusing on 1) Java-based application server software and 2) personalization and customer relationship management products for delivering targeted e-mails and advertisements, The company also offers Web design, consulting and support services. Competitors include BEA Systems and BroadVision. ARTG reported revenue of $46.3 million in Q3 and has been profitable for the past two quarters.

Asia Global Crossing

A provider of broadband IP-based data and voice communications, Asia Global Crossing is located in Beverly Hills, Calif., though it sells to corporations and telcos in the Asia and Pacific markets. Among its competitors are Japan’s Nippon Telegraph and Telephone and Pacific Century CyberWorks of Hong Kong. AGCX lost $23.3 million, or 5 cents per share, in Q3.

CacheFlow

An emerging contender in the caching market, CacheFlow makes “caching appliances” that store Internet data, thus saving users from having to access it through the original server. Customers include corporations (which use the devices for their intranets), ISPs and e-commerce Web sites. CFLO is challenging Inktomi in the caching market. CacheFlow had $32.5 million in revenues in the quarter ended in October – quadruple the year-ago quarter – but lost $25.6 million, or 75 cents per share. The company is located in Sunnyvale, Calif.

Commerce One

Headquartered in Pleasanton, Calif., Commerce One last year pushed itself onto the short list of prominent e-commerce software vendors. CMRC specializes in software that connects corporate buyers with suppliers around the world and has landed contracts to help build vertical trading communities in several industries. Top competitors include Oracle and Ariba. Sales in Q3 hit $112.7 million, though losses totaled $60.6 million, or 37 cents per share.

Hotel Reservations Network

Dallas-based Hotel Reservations Network is doing battle with companies such as priceline.com and Expedia in the war to sell hotel rooms to consumers in Europe and North America. Third-quarter revenues were $94.6 million, while net income was $1.9 million.

Multex

With scores of online and offline competitors, Multex has managed to build a business providing investment research reports that enabled it to turn a slight profit (1 cent per share) in Q3, its first time in the black. MLTX offers subscription and pay-per-view services to investment professionals, as well as free information on its Web sites and free newsletters for individual investors. Multex is based in New York.

Palm

The king

of mobile handheld devices needs little introduction. While it is being challenged by Handspring and Microsoft, Palm continues to dominate the handheld market. Sales in the quarter ended in November were $522 million, with net income of $20 million, or 4 cents per share. Palm’s headquarters are in Santa Clara, Calif.

Razorfish

Internet consulting and design services provider Razorfish competes in a crowded field with companies such as Scient, Viant, marchFIRST and AGENCY.COM. Revenue was $77.1 million in Q3 – only slightly better than Q2 and well below sales in the year-ago quarter. RAZF ended a streak of two consecutive profitable quarters with a $0.5 million loss. Razorfish was one of the first companies to emerge from New York’s Silicon Alley.

Red Hat

Perhaps the most recognized company selling Linux software and services, Red Hat beat analysts’ estimates for the quarter ended in November with revenues of $22.4 million and an adjusted net loss of one cent per share (forecasts called for a net loss of 2 cents per share). While competing with other Linux vendors such as VA Linux Systems, RHAT’s real opponents are more-established operating systems such as Windows and Unix. Red Hat is located in Durham, N.C.

Research in Motion Ltd.

With its Blackberry line of wireless two-way e-mail pagers, Research in Motion has taken the corporate world by storm. (I read somewhere that these devices are so addictive that some refer to them as “Crackberry.”) Located in Waterloo, Ontario, RIMM reported Q3 revenues of $62 million, with a profit of $2 million, or 2 cents per share.

Sapient

Another Web consulting, design and implementation company, Sapient has built up much of its business through acquisitions. Revenues for the Cambridge, Mass.-based firm reached $138 million in the third quarter, while SAPE has consistently posted profits for the past several quarters. However, like many other players in this space, SAPE is feeling the pinch from the slowdown in Internet spending; on Thursday it announced it expects Q4 earnings of 10 cents per share, coming short of estimates calling for a net profit of 12 cents per share.

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