Zengine: Timing Is Everything

Estimates were that e-consulting firms would be riding a big wave of
spending – with revenues of $425 million in 1998 to $4.4 billion by 2003.
However, with dot-com companies being shut-off from capital infusions, the
revenues of e-consultants have definitely been impacted – as have the stock
prices.

True, e-consultants are making transitions towards traditional companies.
But this takes time.

Another problem for e-consultants is the sheer number of companies.
Expect consolidation to hit the industry.

So it seems unusual that
Zengine, an
e-consultant, wants to go public. Then again, the company has a small
banker: William Blair. The offering is for 4.3 million shares at the price
range of $13-$15. The proposed ticker symbol is ZNGN.

Like most other e-consultants, Zengine provides its clients with turn-key
solutions for e-commerce, B2B, personalization and customer relationship
management (basically, whatever a client wants). As a result, clients get to
market quicker – with technologies that work.

The Zengine technologies are centrally stored and are called KORE. KORE can
be leveraged into future projects, so as to save time (hey, why reinvent the
wheel?)

In all, the company has 15 e-commerce clients. The top client is Miami
Computer Supply (MCSi), which accounts for 48% of revenues. MCSi is also
the parent company of Zengine.

What’s more, Zengine did not start its operations until the fourth quarter
of 1999. Since then, revenues have reached $5.1 million. Operating losses
were $200,000.

Perhaps last year Zengine would have had a successful IPO. But right now,
investors are extremely negative on the sector. In fact, all e-consulting
firms that went public in 2000 are selling below their offering prices. So,
expect Zengine’s IPO to also experience problems.