Tag - Internet

Jack Ma, the chairman of the Chinese Internet conglomerate Alibaba Group, said last week that he is "very interested" in buying Yahoo! Inc. (Nasdaq: YHOO).

Shares of Overstock.com Inc. (Nasdaq:OSTK) dipped 3.4% this morning after the company announced after the market closed Tuesday that it has filed a new $500 million shelf registration statement with the Securities and Exchange Commission. The Salt Lake City-based online retailer said that the new statement will replace the company’s existing one, which would have expired later this year. Once effective, the new statement will allow Overstock.com, when ready, to sell up to $500 million of its debt securities, common stock, warrants and other securities in one or more offerings.

The company said it doesn't have current plans to raise capital but wants to have a statement in place “should the need or opportunity arise to raise capital on attractive terms.”

This morning, Overstock.com is trading at $18.75, down $0.66 from Tuesday's close. The stock has traded as low as $8.61 and as high as $39.39 in the past year.

For detailed price information and news stories on Overstock.com, click OSTK.

8x8 Inc. (Nasdaq:EGHT) said Wednesday it had been granted a U.S. patent for Voice over Internet Protocol that pertains to Internet Protocol communication systems and to broadband telephone services having distributed local gateways. The patent was issued on July 1. The Santa Clara, Calif.-based telecommunication company offers voice and video Internet-based telephone services for businesses and residential customers. Ahead of the bell on Wednesday, 8x8 shares were up 10.8% to $1.23.

Sierra Wireless Inc. (Nasdaq:SWIR)
Vancouver, Canada
http://www.sierrawireless.com

52-week low / high: $11.98 / $28.10
Shares Outstanding: 31.3 million
Market Capitalization: $540 million

Mounties and maple syrup aren’t the only things Canada is famous for: tech companies also have their place in the country’s bustling cities. Vancouver-based Sierra Wireless Inc. (Nasdaq:SWIR), a maker of software and devices that facilitate mobile broadband networks, is one standout from the bunch with its constantly improving financials.

Revenue for the fourth quarter ended Dec. 31, 2007 increased an impressive 98% to a record $135.6 million, compared with $68.3 million in the fourth quarter of 2006. Earnings increased to $11.5 million, or $0.37 per share, compared with earnings of $2.4 million, or $0.09 per share, a year earlier.

The improvement was primarily due to the early launch of laptop cards for wireless access.

“Our momentum with these new products helped lead the way to record revenue in each of our three main business regions: The Americas, Asia and Europe,” president and CEO Jason Cohenour said in a statement on Jan. 31.

Founded in 1993, Sierra Wireless has offices in Canada, the United States, England and Hong Kong. It has distributors in approximately 30 countries, located in all continents except South America. The company frequently offers its products to manufacturers of computer and communications hardware, who in turn integrate the technology into their products.

In February, Sierra Wireless announced that its embedded module has been selected by German communications equipment maker LANCOM Systems GmbH to provide broadband connectivity for one of its routers. Later that month, Becker Marine Systems Communication said that it will take advantage of the technology to help mariners stay in touch with each other.

More recently, Sierra Wireless and telecommunications giant Sprint Nextel Corp. (NYSE:S) announced the launch of a USB modem for mobile broadband networks. Billed as the “nation’s smallest,” the Sierra Wireless Compass 597 USB is about the size of a pack of gum and operates on Sprint’s network to provide users with Internet access from their desktops or laptops.

“Our industry is in the midst of a transition from a niche, low-volume business focused primarily on corporate and industrial users, to a mainstream, high-volume segment increasingly serving consumers, in addition to traditional business users,” Sierra Wireless said in its 2007 annual report.

“This new environment offers the potential for strong revenue growth, but it also brings added competition and the challenge of maintaining solid margins,” the report continues. Despite those difficulties, the company’s gross margin was 28% in 2007.

Revenue for the year ended Dec. 31, 2007, jumped 99% to $439.9 million from $221.3 million in 2006. Profit more than tripled to $32.5 million, or $1.16 per share, compared with earnings of $9.8 million, or $0.38 per share, in 2006.

Wall Street expects the company’s financial results to continue improving: for 2008, 18 analysts polled by Thomson Financial expect net income to climb 17.2% to $1.36 per share, while revenues are projected to increase 30% to $571.83 million.

Note: Sierra Wireless (Nasdaq:SWIR) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Sierra Wireless displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.

Going, going gone are the glory days of old-fashioned, in-person auctions, left largely now to the nostalgic at heart. These days the Internet, and more notably auction sites Liquidity Services, Inc. (Nasdaq:LQDT) and Overstock.com (Nasdaq:OSTK), have emerged as critical business tools for professional buyers of wholesale, surplus and salvage assets.

It’s estimated that the online auction market will exceed $63.1 billion this year, from $38.5 billion in 2004 — perfect timing for Liquidity Services to cash in on the growth.
The company is an operator of online auctions where professional buyers can bid on wholesale, surplus and salvage assets. Approximately 500 product categories are listed on the company’s automated online marketplace, including consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware and specialty equipment.

The company also owns the Liquidation.com auction site (where government agencies sell wholesale, surplus and salvage assets), the Govliquidation.com site (where federal government surplus and scrap assets are sold), and the Liqidbiz.com site (where European companies sell goods to international buyers). In addition, Liquidity Services operates a wholesale portal, Govwholesale.com, connecting advertisers with buyers seeking products for resale.

Liquidity Services’ online auction sites are supported by its marketing, merchandising, fulfillment, payment, collection, dispute mediation and logistics management services. The company also helps sellers prepare sales information, warehouse merchandise and settle and report transactions.

At year-end 2007, Liquidity Services had 724,000 registered buyers, up from 565,000 registered buyers one year earlier. The number of auction participants rose to a record 323,000 in December versus 247,000 participants one year ago, and the number of completed transactions rose to a record 63,000 from 49,000 a year earlier.

People often complain that they can’t escape email, voicemail and all the other modes of modern communication, but in reality there remain quite a few places where you really still can get away from it all … or at least a lot of it.

Passengers on commercial airlines, personnel on military jets, as well as those at sea, usually exist in Internet-free zones, but email, text messaging and even online gaming are all on their way to an airplane near you, with EMS Technologies, Inc. (Nasdaq:ELMG) leading the push.

Aviation research group Freesky Research estimates that by 2011, some 40% of all commercial aircraft will have broadband connectivity, representing a 15-fold increase over today’s $32 million market for commercial aviation broadband gear and highly benefiting EMS in the future.

But the company has its hand in more than just email on planes: through its LXE division, it develops rugged handheld mobile communications gear to help workers track inventories from the field. It also installed the antenna system on JetBlue aircraft, enabling the carrier to offer live satellite television programming on its flights.

This diverse product mix and persistent investment in new technologies have produced numbers that show sustained growth. For the full year ended Dec. 31, 2007, revenues totaled $287.9 million, up from $261.1 million in 2006 and $225.9 million in 2005. Last year, despite strong growth in operating income, EMS’ GAAP net income fell to $18.7 million from $33 million the year before due to a hefty gain from discontinued operations the year before. In an apples to apples comparison, or pro forma basis, earnings from continuing operations, at $18.7 million in 2007, were 22% higher than the comparable figure of $15.8 million in 2006. On a per share basis, the same pro forma results show growth of 68%, to $1.24 per share in 2007, from $0.74 per share in 2006.

A recent changing of the guard in management and the board of directors of a little-followed microcap network device play suggests an emerging value situation worth investigating.

Irvine, Calif.-based Lantronix, Inc. (Nasdaq:LTRX) has remained a story of unfulfilled potential for its shareholders in recent years. The $56 million market capitalization company is a leading player in the emerging device networking market. Lantronix’s secure communication solutions provide remote access, management and control of virtually any electronic device via the Internet. The company’s products are used in markets ranging from security, industrial and building automation to medical, financial, government, consumers electronics and appliances.

While the long-term future of the device networking market looks bright, a world here-and-now filled with interconnected devices can’t come soon enough for Lantronix. The company’s annual sales have nudged up only modestly over the past few years, to $55.3 million in fiscal 2007 from $49 million in fiscal 2003. Losses have been reduced over this stretch, but sustained profitability has still proven elusive. This situation could be about to change. Last month, the company announced the appointment of Jerry Chase as the company’s new chief executive. The hiring of Chase follows a year in which the company has also made significant changes to its board of directors. Four of Lantronix’s five directors have joined the board over the past year.

Chase joins Lantronix following a successful previous turnaround stint. From 2004 to 2007, Chase was CEO of digital video equipment maker Terayon Communications. Under Chase, Terayon sold two of its three unprofitable units and grew revenue in its remaining division to $60 million from $24 million. In April 2007, Terayon was acquired by Motorola, Inc. (NYSE:MOT). Chase’s compensation package with Lantronix includes accelerated vesting of a portion of his stock options depending on the stock’s performance, beginning with Lantronix’s share price staying above the $1.50 level on a sustained basis. Lantronix closed at $0.93 a share on Monday, around the middle of a 52-week range of $0.47 to $1.72.

Communicate.com Inc. (OTC: CMNN)
Vancouver, Canada
http://www.cmnn.com/

52-week low / high: $0.83 / $3.48
Shares Outstanding: 21.45 million
Market Capitalization: $53.62 million

Although the dot-com bubble burst eons ago in Internet time, many online companies are still pumping out profits albeit without the hyperbole and out-of-whack stock prices. Unlike dot-bombs Flooz.com and Pets.com, Communicate.com (OTC: CMNN) has valuable property that might bring actual profits — yes, profits — to the Vancouver-based firm.

Although the company has been overlooked by many investors because it is both based in Canada and trades over the counter, the firm owns highly valuable Internet domain names. Domain names, although their intrinsic value is difficult to assess, have been sold for extremely high prices. Beer.com went for $7 million. Porn.com was snapped up for $9.5 million. At the height of dot-com mania in 2000, AsSeenOnTv.com was purchased for $5.1 million.

Even though Communicate.com’s market cap is under $54 million, the firm owns a number of potentially lucrative domain names. Perfume.com, Body.com, Call.com, Karate.com, Brazil.com, Canadian.com and Importers.com are included among the company’s URL portfolio. The firm’s Vietnam.com domain is ranked number three at Google for the keyword Vietnam, behind Wikipedia and Lonely Planet.

Communicate.com owns more than 1,100 domain names. Recently, the domain name market has hit new highs. In 2007, Business.com was sold for $350 million and Ancestry.com was acquired for $300 million. On March 11, Clek Media announced that it bought Fund.com for $9.9 million in an all-cash transaction. Among its domain names, Perfume.com is the only website being operated (other than Communicate.com, of course).

Among factors that may help influence future earnings, Communicate.com’s CEO C. Geoffrey Hampson took the helm on June 1, 2007. Hampson was formerly CEO of PEER 1 Network Enterprises and built the company from annual revenue of approximately $250,000 to one of the largest in the industry. Chantal Iorio, the company’s vice president of finance, also joined Communicate.com on Dec. 12, 2007.

In the most recently reported financial data, Communicate.com posted revenue of $5.1 million for the nine months ended Sept. 30, compared with $5.2 million during the same period of 2006. Cost of revenue for the nine-month period rose to $3.8 million, which was even with $3.8 million a year earlier.

Note: Communicate.com Inc. (OTC: CMNN) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Communicate.com displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.

Digital media company DivX, Inc. (Nasdaq: DIVX) reported fourth-quarter earnings a penny above the consensus on Wall Street, but issued disappointing guidance for 2008 that sent shares crumbling to a 52-week low.

Shares of DivX plummeted 29.54%, or $3.01, to a 52-week low of $7.18. Shares have been trading in the range of $8.78 to $23.76 for the past 52 weeks.

The San Diego, Calif.-based company said it expects earnings to range from $0.44 to $0.52 per share on revenues of $95 million to $100 million due to higher product development costs.

Seven analysts polled by Thomson Financial are on average forecasting revenue of $104.24 million for 2008, while five analysts polled by Thomson Financial are on average projecting earnings of $0.67 per share.

“Guidance for 2008 was substantially below consensus,” wrote Avondale Partners analyst John Bright. “We continue to believe that DIVX has an attractive licensing business model with the potential to tap into online video distribution. However, DIVX also has a transition period ahead of it.”

Bright said he sees 2008 as a transition year in which DivX will invest in new initiatives, including forming agreements to become involved in online video distribution whether with "retailers" such as Netflix, Inc. (Nasdaq: NFLX), Blockbuster Inc. (NYSE: BBI) and CinemaNow. The analyst also noted the company will expand into new product categories beyond DVD players such as Blu-Ray players, and new certifications such as DivX HD and a new H.264 certification.

Local.com Corp. (Nasdaq: LOCM) shares are rising after the localized Internet search provider reported Wednesday that its websites received 14% more unique monthly visitors during February than during January.

“Growing our organic traffic to over 50% of all traffic is a strategic objective for us,” said COO Bruce Crair said in a statement. “The investment we made during the second half of 2007 is paying off, with organic traffic reaching 37% of our total traffic, up from about 10% of all traffic a year ago.”

During February, Local.com and its network received 5.7 million unique visitors during February, up from January’s 5 million unique monthly visitors.

Jon Hickman, an analyst for the investment bank MDB Capital Group, said the announcement was “mildly positive.”

“It’s in line with what they said they were going to do,” Hickman said. “I think they’re a little bit ahead of the expected timeline, so that’s good news for them.”

In afternoon trading, LOCM shares are up 5.03%, or $0.20, at $4.18. Over the last 52 weeks, shares have ranged from $2.77 to $13.74.

Bidz.com, Inc. (Nasdaq: BIDZ) shares are declining after the online auctioneer jewelry reported after Thursday’s close that CEO Dave Zinberg terminated his 10b5-1 trading plan. The Culver City, Calif.-based company’s board reinstated his yearly salary of $290,000 and made Zinberg eligible for an annual bonus, effective March 1. Zinberg’s plan was originally implemented during the summer of 2007, after the chief executive reduced his annual salary to $1 with no stock option grants.

After Thursday’s close, Bidz.com reported fourth-quarter earnings of $8.2 million, or $0.29 per share, up from $1 million, or $0.04 per share, a year earlier. The results met Wall Street analysts’ expectation of earning $0.29 per share.

Quarterly revenue rose to $63.2 million, up 68% from $37.6 million during the year-ago period. Analysts, on average, projected revenue of $63 million.

Going forward, Bidz.com expects first-quarter revenue of between $59 million and $61 million with earnings in the range of $0.14 to $0.16 per share. Wall Street expects earnings of $0.15 per share on $60.8 million in revenue.

As of late, the subprime mess has made many investors run from any stocks having to do with real estate or mortgages, but before you head for the hills just yet, consider this: additional interest rate cuts by the Fed would likely encourage a new wave of mortgage refinancing. This would not only benefit Bankrate.com, Inc. (Nasdaq: RATE), and Move, Inc.’s (Nasdaq: MOVE) Realtor.com, but also the investors who roll the dice in the general direction of these two mortgage shopping websites.

Bankrate.com is the leading online website for mortgage shopping, and owns and operates several Internet-based consumer banking sites.

Its flagship site, Bankrate.com, aggregates information that allows consumers to compare mortgages, home equity loans, auto loans, credit cards, money market and CD rates and ATM fees. Bankrate.com gathers this information from approximately 4,800 financial institutions and 575 markets nationwide. 

Revenues are generated from selling advertising on its consumer finance websites, which include Bankrate.com, Interest.com, FastFind.com and Mortgage-cacl.com. In addition, the company sells advertising in its published mortgage, CD and deposit rate guides and through its subscription newsletters. It also generates fees from licensing its data to research organizations.

Recent acquisitions are enabling Bankrate.com to extending its reach into new consumer finance segments. In December and January, the company acquired Nationwide Card Services, a Web-based credit card marketer; SavingsforCollege.com, which specializes in 529 savings plans for college tuition; InsureMe, which operates a website where consumers can compare insurance rates; and Lower Fees, which operates Fee Disclosure, an online site for comparing mortgage transaction and closing fees. The combined purchase price of the four businesses was approximately $98 million, excluding potential cash earn-outs based on achieving certain financial performance metrics. 

Bankrate.com’s total revenues increased 20% in 2007 to $95.6 million from $79.6 million, driven by 31% year-over-year growth in on-line revenues, 26% improvement in graphic advertising revenues and a 38% gain in hyperlink revenues, which was partially offset by a 24% decline in print publishing and licensing revenues. Despite doubling net income in 2007 to $20 million, or $1.04 per share, from $10 million, or $0.56 per share last year, Bankrate.com’s shares fell due to lower-than-expected December quarter results. 

EarthLink, Inc. (Nasdaq: ELNK) CEO Rolla Huff said the Internet service provider is confident the dial-up Internet service market will exist for many years. Huff made the comments during a morning conference call.

“We believe that, not unlike the paging industry, there will be a meaningful segment of U.S. households that will have a dial-up Internet service connection for many years to come,” Huff said.

The chief executive noted industry estimates that place dial-up penetration rates at between 6% and 10% of American households in 2014.

“We aren’t ready to make that prediction, but we’re ready to predict that this form of Internet connection isn’t going away overnight,” he said. “While we’re not an organic growth story today, we’re demonstrating that this business can generate substantial free cash flow. Given the markets we’re all looking at today and probably for the foreseeable future, being in the position to generate substantial cash flow with an unleveraged balance sheet doesn’t seem like a bad place to be.”

An analyst asked Huff if EarthLink plans to acquire dial-up customers from AOL. On Wednesday, Time Warner Inc. (NYSE: TWX) CEO Jeff Bewkes announced on a conference call that the media company plans to split AOL into two segments — advertising and dial-up Internet access.

Shares of Local.com Corp. (Nasdaq: LOCM) are jumping following news before the opening that the local search website achieved record traffic results in January.

The Irvine, Calif.-based company announced that traffic to the site www.local.com reached a record 11.6 million monthly unique visitors in January and a record 3.8 million monthly unique visitors on its associated search network LocalConnect.

“Our search traffic continues to grow, particularly on our LocalConnect network,” said chairman and CEO Heath Clarke in a statement. “This represents growth in organic traffic, a key objective for us during 2008.”

“That is a significant quantity of traffic, and the site is constantly in the top five of local searches,” said Colin Gillis, who has a “buy” rating on the stock and is a senior technology analyst at financial services firm Canaccord Adams.

“If any of the traditional players want to expand their presence, Local.com is a good takeover candidate,” Gillis said. “There is no clear leader in local search yet.”

Looking ahead, Clarke said that the company has expanded its sales team so that it can build its own advertiser base.

At 11:44 a.m. ET, shares of Local.com (LOCM) had added $1.25, or 34%, to $4.90. The 52-week high of $13.74 was reached on July 6, 2007, while the 52-week low of $2.77 was established on Jan. 22.

Software company NetManage, Inc. (Nasdaq: NETM) today reported robust financial results for the fourth quarter.

For the three months ended Dec. 31, 2007, the Cupertino, Calif.-based company recorded net income of $1.7 million, or $0.17 per share, compared with a net loss of $916,000, or $0.10 per share, in the same period last year.

Net revenues increased 27% to $10.9 million, compared with $8.7 million in the fourth quarter of 2006.

During the quarter, the company said it received new and renewed business from such customers as AIG, Brick Warehouse LP and Rogers Communication.

The small cap reiterated its previous announcement on Dec. 12, 2007, that Rocket Software, Inc., a privately held corporation, is acquiring NetManage. The small cap noted however that the due diligence has been completed for the acquisition and that more time will be required to syndicate the financing.

Shares of NetManage (NETM) popped 13.02%, or $0.66, to $5.73 in pre-market trading. Shares of NetManage have been trading in the range of $3.60 to $6.99 for the past 52 weeks.

Sify Technologies Ltd. (Nasdaq: SIFY), a provider of Internet, network and electronic commerce services in India, reported third-quarter earnings a penny below an analyst’s estimate on Wall Street.

Shares of Sify Technologies slid 6.28%, or $0.28, to a new 52-week low of $4.18 ahead of the opening. Shares of Sify Technologies have been trading in the range of $4.40 to $11.93 for the past 52 weeks.

For the three months ended Dec. 31, 2007, the Chennai, India-based company reported earnings per share of $0.03 per share, a penny below the $0.04 per share an analyst polled by Thomson Financial was forecasting.

Revenues for the quarter were $38.38 million, in line with the $38.49 million an analyst polled by Thomson Financial was forecasting. The current quarter’s revenues represent an 8.7% increase over $31.50 million booked in the same quarter last year.

A famous Kansasian once said “there’s no place like home.” After a 17-year journey that led NIC Inc. (Nasdaq: EGOV), a provider of e-government services, through a dot-com implosion that left many of its ilk by the roadside, the small cap has now solidly found its home.

Olathe, Kan.-based NIC Inc. has been able to swoop in as an efficiency savior to state and local government officials who are facing difficult cost-cutting decisions while efficiently bringing in revenue and meeting needs of consumers and businesses,

With a suite of services, the company partners with government entities to streamline their dealings with businesses and the public. NIC is currently in the midst of an aggressive plan to lock up more state portal contracts, which could give investors reason to cast their vote in favor of this small-cap survivor that hasn’t received much notice.

Emerging from the dark ages that followed the dot-com meltdown, NIC had a management shuffle — which included the return of co-founder Jeff Fraser as chairman, president and chief executive — and a renewed focus on its core services. That move has required some added investment in technology and personnel over the last few years, yet it has given two analysts currently following NIC reason to believe that it will fuel continued growth.

Web portal design is a necessary part of doing business, and NIC cast its lot with serving the needs of government. Initiatives announced in late 2006 included a target of doubling the population served to 120 million from 60 million by 2010. To accomplish that, NIC is hoping to add about four states a year to its roster. Fraser told analysts on a Nov. 7 third-quarter conference call that NIC remained on track to meet that goal.

Shares of IncrediMail Ltd. (Nasdaq: MAIL) are sinking to a 52-week low after the Internet content and media company said this morning that Google will terminate its AdSense partnership with IncrediMail.

As a result, Google is disabling ads to search result pages displayed through the company's account. Search revenues powered by Google’s AdSense program made a significant contribution to the company’s results in 2006 and 2007.

The company noted it is currently exploring alternative relationships with Google and other vendors.

Shares of IncrediMail (MAIL) tumbled 44.64%, or $2.04, to $2.53 out of the gate. Shares of IncrediMail have been trading in the range of $4.46 to $10.69 for the past 52 weeks.

Not long ago, when you wanted to make a call, you used a cell phone or even a run-of-the-mill telephone. When you wanted to watch TV, you used a television. These days, though, almost all our daily communication and media needs can be met through the Internet.

Because of this trend, the high demand for bandwidth is upon us and continues to expand in response to the rapid deployment of bandwidth-intensive services such as Internet phone, Internet television, online gaming and streaming video.

International Data Corp. forecasts the U.S. subscriber base for Internet phone and Internet television will grow at annual rates of 64% and 131%, respectively, between 2005 and 2009. Online digital game downloads are forecast to increase to 3.3 billion by 2009 from 1.2 billion while overall broadband penetration is projected to grow from 34% to 53% of U.S. households.

Poised to prosper are Switch & Data Facilities Company, Inc. (Nasdaq: SDXC) and RRSAT Global Communications Network Ltd. (Nasdaq: RRST), two companies that provide services that address rising bandwidth demand.
 
Switch & Data Facilities provides network neutral connection and collocation services for telecoms, Internet service providers and online content providers. Initially, the various networks that made up the Internet connected at public network access points. Eventually these became owned and managed by telecoms. As traffic grew, however, these network access points became overloaded and some network service providers began connecting directly by establishing fiber optic links between facilities. These links, expensive to build and maintain, led to the formation of commercial businesses such as Switch & Data, which operates network neutral Internet exchanges and collocation facilities.

Spreading the good word—or bad—is both easier and more difficult for companies in the Internet age.

The conundrum is that while the World Wide Web has drastically improved channels of communication, messages get lost in the din of an always-on, free-flowing data surge that can overwhelm surfers and CEOs alike.

Vocus, Inc. (Nasdaq: VOCS) is a Lanham, Md.-based company that tries to help its clients cut through the clutter in delivering their messages to the news media and other audiences with the software and online services that automate many functions of public relations and corporate communications.

Apparently the company, which launched its first products in 1999, has succeeded in getting its message across to analysts. Of the nine analysts surveyed by Thomson Financial, five have Vocus at the equivalent of a “strong buy,” three have it at “buy” and just one says “hold.”

With good reason. Compare a chart of the Vocus share price against the Russell 2000 index of smaller companies and the performances this year are strikingly different. While the Russell has been about flat to down for the year, Vocus shares have been heading mostly higher—despite a November pullback from the all-time high of $38 that was hit on Oct. 30. The stock’s low has been $15.60, while shares closed at $31.99 on Thursday.

The only thing lacking for investors considering a stake in Vocus is a long-term track record. Vocus went public in December 2005, but it’s been fairly consistent at delivering pleasing results in the past two years.

According to a survey recently conducted for Vocus, less than a third of public relations professionals utilize any sort of automation in managing their relationships, demonstrating just how underpenetrated the sector is.

Want to know who last left their scissors in a patient’s abdomen? Look no further: Health Grades, Inc. (Nasdaq: HGRD) is keeping track. And with increasing exposure expected when Google launches Google Health in early 2008, it will be that much easier to find Dr. Oopsie.

HealthGrades has a proprietary rating system for hospitals, nursing homes, home health agencies and physicians; data include whether doctors are board certified and whether they are free of state and federal sanctions. The Golden, Colo.-based company’s clients include hospitals, employers, benefits consulting firms, insurance companies and consumers, who surf its website to find quality ratings for 5,000 hospitals, 700,000 physicians and 1,600 nursing homes.

All well and good for consumers. But HealthGrades’ shares haven’t done much for investors since rallying to the $7 level in early 2006. They ended Thursday at $5.68 each, up 33% on the year, but still gyrating in a rough two-year range of $4 to $7.

Dictating trading is world-on-a-string Google Inc. (Nasdaq: GOOG), the $231 billion master puppeteer, who started talking about plans to introduce a health-care product in early 2006. And talking … and talking. Now, with Google’s latest schedule to launch Google Health in early 2008—analysts are expecting it as soon as February—HealthGrades just may bust through to new highs.

At least that’s what Jackson Spears, director of research at Capstone Investments, thinks. He’s carrying a “strong buy” on HealthGrades, with a price target of $10. The key: “What will the company look like in 2008?” Spears said in an interview with SmallCapInvestor.com.

012 Smile.Communications LTD
www.012.net
NASDAQ: SMLC
Scheduled for Oct. 29
$375.7 million post-money valuation

Is it 1999 all over again? No matter how mature the Internet seems, investors want stock in it. Hence, Internet Gold - Golden Lines Ltd. (Nasdaq: IGLD), an Israeli telecommunications and Internet company, is spinning off its 012 Smile.Communications subsidiary, which operates a broadband Internet service, VoIP-based telephone and business services, and a network of Wi-Fi Internet access spots throughout Israel. After the deal closes, Internet Gold will own 73.3% of the 012 Smile.Communications business and all of its Smile.Media business, which provides online content, advertising, commerce and search services.

Internet Gold hopes to net about $91.3 million from the offering of 6,675,000 shares at a price between $14 and $16 per share. (All numbers are in U.S. dollars on U.S. GAAP.) Of the proceeds from the offering, $41.0 million will go to pay off debt, debentures, and a contingent payment stemming from its December 2006 acquisition of 012 Golden Lines, an Internet service provider (ISP) that was rolled into Smile.Communications. The rest of the funds will go to general corporate purposes, possibly including acquisitions. Acquisitions aside, the big source of growth will be telephone services. Israel is a tiny country. Its citizens come from all over the world, and its businesses (including Internet Gold) rely on customers and partners all over the place. Hence, it’s easy for people to run up big long-distance bills, and that makes alternatives attractive. Already, the company captures 34% of incoming and outgoing international call minutes within Israel.

Although 012 Smile.Communications is the second largest ISP in Israel with about a third of the market, it generated just $244.4 million in revenue from one million residential and business customers in 2006 on a pro-forma basis. To put that in perspective, Comcast Corporation (Nasdaq: CMCSA), which is the second largest ISP in the United States with about 12% of the market, brought in over $24.9 billion in total revenue last year, although the company did not break down how much of those sales came from its 11 million Internet subscribers and how much came from customers using television and telephone services.

Shares of DivX, Inc. (Nasdaq: DIVX) jumped in pre-market trading after the provider of video software tools used to play and share high-quality video announced this morning that it has signed a “global” agreement with Yahoo! Inc. (Nasdaq: YHOO) to offer consumers who download DivX video software tools a co-branded version of the Yahoo! Toolbar and Internet Explorer 7 optimized for Yahoo!.

The Yahoo! offering is expected to launch early November 2007 and will replace third-party software previously distributed by DivX.

Shares of DIVX shot up $1.11, or 7.71%, to $15.50 in pre-market trading.

Shares of Pacific Internet Ltd. (Nasdaq: PCNTF) are taking a hit today after the Internet communications service provider said that it filed with the U.S. Securities and Exchange Commission to amend its operating results for the three six-month periods ended June 30, 2007.

Pacific Internet said it is correcting its “under-accrual” of expenses, including licensing fees and certain expenses related to potential acquisitions being considered by the company. The company is also correcting the accounting for legal, accounting and public relations expenses incurred in connection with a tender offer for Pacific Internet by Connect Holdings Limited. 

The Singapore-based firm also noted that it is evaluating the financial impact of restructuring its wireless, voice and regional product assets and initiatives, which could include the discontinuance of non-performing assets and initiatives. As a result, the firm may recognize restructuring charges in the third quarter, which ends September 30.

Shares of Pacific Internet (PCNTF) toppled $1.61, or 14.66%, to $9.35 in midday trading.

Shares of Move Inc. (Nasdaq: MOVE) have moved up following news after Monday’s close that the creator of websites that help consumers relocate has authorized a $50 repurchase of its common stock.

The board of Westlake Village, Calif.-based Move has authorized a $50 million program to buy back its common stock that will expire on Sept. 17, 2008, the company said. Shares can be purchased on the common market or in privately negotiated transactions.

At 3:19 p.m. ET, shares of Move Inc. (MOVE) had added $0.24, or 8%, to $3.10.

InfoSpace, Inc. (Nasdaq: INSP) shares are soaring in pre-market trading after the Internet search operator announced that its board of directors approved the sale of its online directory business to Idearc Inc. (NYSE: IAR) for $225 million in cash.

“The sale of our directory business is part of the board of directors’ ongoing review of our company and the opportunities available to enhance value for our shareholders,” CEO Jim Voelker said in a statement. “In addition to unlocking the value of our director business that was not reflected in the company’s market valuation, this transaction is extremely tax efficient, allowing us to capitalize on our net operating losses to significantly maximize the cash proceeds from the sale.” 

Texas-based Idearc publishes yellow pages directories in 35 states. The acquisition gives Idearc control of Switchboard.com and other online directory assets. Idearc said the deal is expected to close within 60 days.

Upon completion of the transaction, InfoSpace said it expects to return the net proceeds from the sale to shareholders as a special cash distribution.

In pre-market trading, InfoSpace shares are hitting a year high, up 27%, or $3.64, at $16.89. Over the last 52 weeks, shares of the small cap have ranged from $12.56 to $27.76.

Question: Does it make sense for a company with 2006 revenues of $7 million to spend $100 million in cash to buy another company with $7 million in 2006 revenues?

According to Answers Corp. – and a couple analysts whose banks make a market in the company – the answer is yes, at least if you look ahead a year.

Answers Corp. (Nasdaq: ANSW), which runs the information site Answers.com, announced on July 16 that it would pay that amount for Lexico Publishing Group, which owns Dictionary.com, Thesaurus.com and Reference.com.

Answers.com, launched in 1999, is trying to become the leading reference site on the Internet, while not competing directly with search engines. It started out as a site providing information about such topics as health, finance, business and entertainment, directing people to licensed information from sources such as Barron’s and Encyclopedia Britannica, as well as its own editorial team. Last November it paid $2 million for FaqFarm, now called WikiAnswers.com, a site that allows users to answer questions posted by others. Since then, WikiAnswers has become the second largest Q&A site on the Web, with 8.5% of the market as measured by visits, albeit far behind the leader, Yahoo! Inc.'s (Nasdaq: YHOO) Yahoo! Answers.

Investors understandably see this as a big and risky deal for a small company. Since the announcement on July 16, the stock has lost about $3, trading now at about $10.50. Its 52-week high was nearly $18 per share in early June, based mostly on rumors that it would be acquired, possibly by Google or another search engine. Its current market cap is $84 million.

The investors’ reaction is not a surprising one. Answers currently has just $9 million in cash and equivalents. In order to make the $100 million purchase, it has filed a shelf registration to sell up to $140 million in debt securities, common and preferred stock, warrants and units. Answers.com reported a $303,000 net loss on $3.4 million revenues for the first quarter ended March 31. For all of 2006, it had a net loss of $8.6 million on $7.0 million revenues. Privately-held Lexico had net income of $2.8 million on $7 million revenues for 2006, according to the press release on the acquisition.

But the two investment banks that follow Answers, both of which expect to provide investment banking services for the company in the next six months, believe the acquisition makes sense for 2008 profitability (the company expects the deal to close this fall.) That’s primarily because Lexico is not as good at creating revenues from its site visitors as is Answers.

Toronto-based Kaboose, Inc. (TSX: KAB) is North America's largest independent online media company in the kids-and-family market — a sector dominated by giants such as Walt Disney Co. (NYSE: DIS), Time Warner Inc.'s (NYSE: TWX) AOL unit and Viacom Inc.’s (NYSE: VIA) Nickelodeon. Solid planning, creative financing, strategic marketing, and sound partnerships have this small-cap standing strong in the face of stiff competition from larger competitors with well-oiled marketing machines.

Founded in 1999, right before the dot-com bust, Kaboose plowed full steam ahead, aggressively snapping up kid-oriented websites. After a round of acquisitions, the small media company conceded it would never win the battle for children's attention on the Internet, so it shifted gears and targeted their moms. Today, the company runs a string of content-related sites that focus on mothers and young families. Visitors to Kaboose's sites can do everything from staying informed of the latest trends and reading product and service reviews to planning birthday parties and family vacations to creating online photo scrapbooks.

With a Web portfolio including popular sites like BabyZone, ParentZone, Birthday in a Box, Two Peas in a Bucket and the recently acquired image-sharing service Bubbleshare, Kaboose's 120,000 pages of content attract 12 million unique visitors a month and its family of sites have more than 2 million registered users (return visitors who can be tracked and cross-promoted)—a fact that has brought advertisers knocking.

"Kaboose is one of only a handful of Canadian companies that is benefiting from the significant shift in advertising spending from traditional media to online media," Ron Shuttleworth of Jennings Capital Inc., said in a recent report.

"As the company scales and solidifies its position as a pre-eminent destination for families, we expect that Kaboose should capture more share of advertising budgets and higher rates," he wrote.

Last year, the advertising dollars poured in: Kaboose revenues swelled 200% to $11.7 million and in the third quarter of last year, the company recorded its first ever profit, $500,000 (a $1-million turnaround from the same period in 2005). All in all, sales have grown more than 1,000% since 2003. And the company has built an impressive list of business partners, including the likes of McDonald's Corp. (NYSE: MCD), Target Corporation (NYSE: TGT), Hewlett-Packard Company (NYSE: HPQ), DaimlerChrysler AG's (NYSE: DCX) Mercedes-Benz subsidiary, Mattel, Inc. (NYSE: MAT) and M.J. Heinz Company (NYSE: HNZ).

Online payment solutions company Authorize.Net Holdings, Inc. (Nasdaq: ANET) agreed to be acquired by electronic payment and risk management solutions company CyberSource Corp. (Nasdaq: CYBS) today for $565 million.

“We believe this transaction, in the years ahead, will enable us to provide even better support for our channel partner and customers,” said Authorize.Net President, Roy Banks. “We expect this combination of resources to bring new and innovative payment solutions to market faster and more successfully then either company could independently.”

CyberSource, which specializes in providing electronic payment and risk management solutions, will finance the Authorize.Net acquisition with stock and cash. Under the agreement, Authorize.Net shareholders will receive 1.1611 shares of CyberSource common stock for every share of Authorize.Net common stock. Shareholders will also receive a pro-rata share of approximately $125 million in cash.

“This is an investment in growth and scale,” said CyberSource CEO Bill McKiernan. “We believe this combination creates a unique global platform to allow us to better serve the industry and positions CyberSource to support new business opportunities as more payment types migrate to web-based platforms.”

The deal, which is subject to shareholder approval and compliance with regulatory requirements, is expected to close in late September or early October 2007. The transaction is expected to be accretive in the fourth quarter of 2007 on a non-GAAP basis.

Terremark Worldwide Inc. (Nasdaq: TMRK) traded down in after-hours trading on Thursday after reporting its results for its fourth quarter and fiscal year. 

The operator of carrier-neutral integrated Internet exchanges and provider of managed IT infrastructure solutions recorded a net loss for the fourth quarter ended March 31, 2007, of $0.10 loss per share, or $4.5 million, compared with a loss of $0.50 loss per share, or $22.0 million, in the same quarter last year. Seven analysts polled by First Call/Thomson Financial expected a loss of $0.09 per share for the quarter on revenue of $30.42 million.

Total revenues for the quarter clocked in at $30.7 million, compared with $19 million in the same quarter one year ago.  Total revenues for the fiscal year were $100.9 million, an increase of 61% over fiscal 2006.

Merriman Curham Ford initiated Rackable Systems Inc., (Nasdaq: RACK) to a buy Thursday.

After gross margin declines since December 2006, analyst David Duley of Merriman Curham Ford forecasts a turnaround for the provider of x86 server and data storage solutions for modern data centers. 

In a research note Duley writes, “Gross margins have bottomed out and should improve over the next several quarters.”

Gross margins were beaten down as a result of larger competitors offering ASP reductions to key customer accounts for Rackable. Duley said he expects strategic initiatives to materialize and purports margins will be driven by new products and an expanded channel. 

“As overall profitability improves, we believe the stock has a good chance of a nice move off the bottom,” wrote Duley. 

The stock currently trades at 0.5 times EV/FY 2006 sales. Second quarter revenues are forecasted to be between $75 and $85 million, or up 4%-18% sequentially. General and administrative expenses are expected to decrease by 8%-10% from pro-forma levels purported in the first quarter; however, research and development costs are expected to increase. Duley expects earnings for fiscal year 2007 to clock in at a loss of $0.07, but forecasts a profit of $0.38 per share for fiscal year 2008.