| BUSINESSWEEK ONLINE : NOVEMBER 1, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
Concentric: Net 'Backbone' Supplier The easy money in Internet stocks is over, according to Jeff Sadler, Net guru at First Albany's FAC/Equities unit. Big institutional money has jumped onto the Net bandwagon, he says, and skewed valuations. So the way to go, he says, is to find companies that provide backbone to the Web, with management that's ahead of the curve in expertise, and backed by savvy Net partners. Right now he is high on Concentric Network (CNCX), which provides small- and midsize business customers with easy-to-use Internet business solutions, including high-speed digital-subscriber-line access, Web-hosting, and e-commerce. Concentric, along with many other Net stocks, has fallen--and is now at 23 1/4 a share, down from 57 in April. Another reason for the stock's drop is the company's series of acquisitions, which tends to dilute shareholder equity. But Sadler thinks the company is building important critical mass to grow faster. Sadler expects the stock to be back at its old high in a year, based on a price-earnings ratio of 20 times estimated 2001 earnings (before interest, taxes, depreciation, and amortization) of $161 million. He expects revenues to grow at 60% to 75% annually. Concentric's partners include Microsoft (MSFT), which has taken a 4% stake; SBC (the merged Southwestern Bell and Pacific Telesis) (SBC) with 4% and a right to buy a further 4%; and energy-and-communications provider Williams, which owns 10%. Concentric is the largest backbone provider of access services to Microsoft's WebTV service and accounts for 24% of the company's revenues. By GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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RELATED ITEMS Concentric: Net ``Backbone'' Supplier CHART: In a Long Slump INTERACT E-Mail to Business Week Online | |||
