ScreamingMedia Inc - SCRM Close:$2.50 change:+0.11
Company Description:
The company filters content from more than 3,000 sources and sends
it to Web sites needing real-time, customized content. The
content covers a wide range of topics and mediums including news,
features, photos, video, stock quotes, audio, weather reports and
more. In 2001, ScreamingMedia acquired Stockpoint and its
portfolio of financial information services. The firm has over
824 customers including AT&T, IBM, Hewlett-Packard, Merrill Lynch,
American Express and Boeing. They have an agreement with Prodigy
Communications to provide custom business, entertainment,
technology and other content to Prodigy's 3.3 million users, and
with Scientific-Atlantic to provide content for their new
information-on-demand application. SCRM has also announced a
strategic partnership with BEA Systems to provide software and
content for BEA's e-business application portals.
Fundamentals:
Last year, the company lost 75-cents per share and analysts expect
them to narrow that loss to 44-cents in 2001 and 14-cents 2002.
Sales are expected to increase from $21.9 million in 2000 to $75
million in 2002. The company has minimal debt and over $88 million
in cash.
Revenue for the second quarter increased 42-percent over
the same quarter a year ago to $4.7 million. Gross margins were
steady at 72-percent. The company's cash burn rate was $5.3
million.
The company has announced it expects to reach profitability in
2002. They anticipate the Stockpoint acquisition will double
their contract value and be accretive to earnings.
Why We Like It:
Whereas many Internet stocks crashed and burned when it was
discovered their business models were as speculative as their stock
prices. ScreamingMedia management is quietly building a successful
business with a rock solid business model. Although many web sites
have gone under, overall Internet usage continues to grow. When
successful web sites need content, it is cheaper and easier to buy
it from ScreamingMedia then produce it themselves. They have
signed customer and partnership agreements with some of the best
corporate names.
With prospects of profitability in 2002, a low cash burn rate and
$88 million in the bank (this equates to $2.31 per share), by
almost any measure this is one of the more undervalued firms
around. Their entire market capitalization at $95.75 million is
barely more than the company bank account.
The dot-bomb has hurt the shares of many fundamentally sound
companies and it appears ScreamingMedia at $2.50 a share is one of
them. This writer believes so and has added these shares to his
personal portfolio.
