As regular readers know, I favor stocks that have been through early ups and downs but are on their
way up behind solid technology.
This month's stock is no exception. IntraNet Solutions (NASDAQ: INRS), specializes in documentation
and content management software solutions for internal Web-based networks.
After an April 1999 IPO, the stock chugged along at around $10 per share until late last year, when it
started climbing to an eventual peak price of $55 per share in March. It has since ridden the NASDAQ crash
down to the mid 20s, but is on its way up as of this writing. By the time this hits the stands, I expect it to
be trading in the low 30s with an upside around 50. Analysts agree and give the stock a uniform Strong Buy
rating.
Regular readers know how huge the intranet market is. As business-to-business (B2B) commerce
expands into 12 figures in the next few years, as foretold by several analyst groups, strong emphasis will
be placed on taking existing corporate documentation and giving supply-chain partners access to the
information. I expect the market for this type of software to grow at least as fast as B2B, which already
composes the vast majority of e-commerce.
There are several core technologies that enable content management but few offer the organizational
and security features of IntraNet Solutions Xpedio Content Management System.
Xpedio is made up of Xpedio Content Server--a heavy-duty content management server --and Xpedio
Content Publisher. Xpedio leverages the company's excellent Intra.doc! product to expand the company's
reach beyond the document-management process to the management of all company information for Web
delivery.
The products are sold through channels and resold by such heavy hitters as Microsoft and Sun
Microsystems. I guess this makes sense, because Xpedio runs on Sun Solaris and Windows NT/2000 server
systems.
The software is compatible with SQL Server 7 and Oracle 8i. The endorsements from these major
server software vendors virtually guarantee solid products.
Current customers include GTE and Hewlett-Packard, which is an indication of the kind of customer
IntraNet Solutions sells to--Fortune 500 enterprises that have boatloads of content to share with
supply-chain partners, investors, and executives through password-protected front ends. Most of the
players in this segment can afford the hefty price tag of around $250,000 for the full suite of products and
QuickStart support program.
While the market for this kind of heavy-duty content management system is relegated to a small
number of big firms, the margin on each sale is huge.
Because Xpedio is without question the best product in a market of great necessity, expect high profits
for a company of this size (66 employees). These gross profits will tend to drive the stock price up in these
bearish times faster than long-term outlooks would indicate. For this reason, if I were a day trader, I would
buy with an eye for profit taking within the year.
Speaking of bearish times, the market of late continually reminds me why I'm not a day trader. Take
Bluestone, for example.
I'm at a loss as to why the stock went into the tank, and it sure doesn't help the CU portfolio that it did.
But I have noticed that Bluestone is part of a trend. The stocks that have fared the poorest in this bear
market are not e-commerce companies but the ones that provide e-commerce companies with products and
services. Be warned.
