| BUSINESSWEEK ONLINE : APRIL 24, 2000 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
Level 8: Heading Up? Level 8 Systems (LVEL) Chairman and CEO Arik Kilman nearly sold the company two years ago to an ardent suitor. But the stock, then trading at 12, got hit in a downdraft and tumbled to 8. So Kilman scrapped the idea of selling and opted to go solo in getting the company growing as fast as possible. Today, Level 8, a provider of business-integration software for e-commerce, is trading at 29 13/16. And sales have mushroomed, from $10 million in 1998 to $52 million in 1999. This year, Kilman sees sales hitting $82 million to $84 million. But in spite of having faster sales growth than its peers, Level 8's stock price has trailed rivals' climb. Trading at five times estimated 2000 revenues, Level 8 is selling at a big discount compared with its rivals, such as New Era of Networks (NEON) and Active Software (ASWX). These competitors trade at an average of 60 times earnings, notes Rick Scocozza, an analyst at Bear Stearns. Despite the big sell-off in tech stocks, his price target for Level 8 is 60 a share, which works out to eight times his estimated 2001 sales of $135 million. Level 8 ''competes favorably in integration infrastructure software,'' says Scocozza. It has pacts with both Microsoft and Hewlett-Packard, having worked with Microsoft since 1996 to develop Geneva Message Queuing (GMQ), which lets Microsoft's Windows interact with thousands of other applications and operating systems. Microsoft recommends GMQ to its customers. In February, Level 8 signed an alliance with Hewlett-Packard to co-market GMQ to customers of HPe3000. Overall, Level 8 products are in use by more than 400 enterprises worldwide. Scocozza expects Level 8 to be in the black this year, with earnings of 2 cents a share. In 2001, he sees earnings of 65 cents. By GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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