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Most Internet stocks have yet to recover from the devastation that hit the sector this year. The pullback in prices has ranged from 40% to 95% since March, and most Web stocks remain badly wounded, including many leaders such as Yahoo! (
YHOO
) and Amazon.com (
AMZN
).
Still, some growth and value hunters are now finding what they describe as incredible bargains in the crushed world of the Internet. One such stock is WebTrends (
WEBT
), which provides companywide solutions to big corporations in managing their e-businesses, including their Net infrastructure, e-commerce strategies, and e-marketing operations.
Even better, WebTrends is making money -- and growing rapidly. Revenues and earnings have been on a fast track, due primarily to its dominance in the Web sector that it serves. Several of America's major businesses are either strategic partners or major customers. "We are impressed with WebTrends' dominant market position, blue-chip customer base, tremendous growth, and exceptionally strong financial condition," says Andrew Lanyi, of Lanyi Research, a subsidiary of CIBC World Markets.
HIGHER TARGET. The company's broad-based product line, he adds, is becoming an indispensable tool for understanding and managing an organization's Internet infrastructure. With WebTrends' software solutions, Internet service providers are given a wide range of ways to analyze Web-site traffic, says Lanyi. WebTrends' tools, he notes, also enable business managers to determine and measure the effectiveness of their e-commerce initiatives.
But like most Internet stocks, WebTrends has been punished: Its shares took a dive from 86 in mid-March to as low as 15 by Oct. 12. It has since recovered a bit of lost ground, bouncing to 32 by Nov. 17. Lanyi recently raised his rating on the stock to a strong buy from a buy and increased his 12-month price target to 85. Lanyi says WebTrends has a "solid management team" that he believes will be able to leverage the company's current dominance into a "long-term market leadeship position."
Chipmaking giant Intel (
INTC
) is among the companies that have signed an alliance with WebTrends. Under the agreement, Intel offers WebTrends' "Internet visitor analysis software" to customers of Intel's e-Business Data Center stores that use Intel's own NetStructure hosting appliance for quick access to the Internet.
IMPRESSIVE JUMPS. Cisco Systems (
CSCO
) has also signed a pact with WebTrends. Cisco now includes WebTrends' "Firewall Suite" as a component for its e-business customers that use Cisco's "SAFE" solutions, which in large part help analyze bandwidth usage and cost, security breaches on the Web, and the extent of employee Net use.
Other big companies that have such deals include Microsoft (
MSFT
), IBM (
IBM
) Hewlett-Packard (
HWP
), Allaire (
ALLR
), and Pharmacia & Upjohn, now called Pharmacia (
PHA
) after its merger with Monsanto in April. The list of customers is equally impressive. They include American Express (
AXP
), Cable & Wireless (
CWP
), Comcast (
CMCSK
), and Dow Jones & Co. (
DJ
). (Business Week Online is also a WebTrends customer.)
WebTrends posted a 221% jump in its third-quarter revenues, to $17 million. Third-quarter net income was equally impressive, climbing 177%, to $2.4 million, or 9 cents a share. Analyst Hermant Wadhwa at Lanyi Research figures WebTrends revenues for all of 2000 will advance a hefty 210%, to $61 million, and an additional 68% in 2001, to $102 million, from 1999's $19.7 million.
Wadhwa figures the company will report per-share earnings of 31 cents this year and 53 cents in 2001, way ahead of 1999's 11 cents a share. Sustaining those results would be quite a trend for WebTrends.
Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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