MicroStrategy, Egghead.com, Launch Media

A selection of some of the most intriguing tech stock ideas on the Web. The items presented do not represent the views of TheStreet.com; rather, the collection is offered as a service to our members who may be scanning the Web for stock-related information.

MicroStrategy
William Schaff (3/22)

MicroStrategy (MSTR) is a leading provider of enterprise decision support system software, which aids companies in sorting through large databases and extracting critical bits of information. Given the massive amounts of data companies are collecting and storing, this type of software is becoming more and more critical, says William Schaff, chief investment officer for Bay Isle Financial in San Francisco.

The company's flagship DSS Suite offers information delivery both actively and passively from very big databases and can be used for managing supply chains, segmenting customer lists and running profitability analysis and customer risk profiling. A variety of related tools allows data to be built into other applications or broadcast to users via email, fax, telephone or pager. American Express (AXP) uses DSS to manage its employee business travel, for example.

The company went public in June 1998 at 12 and traded as high as 46 in August. Since a February offering of 2 million additional shares, the stock has been trading in the low-20s. MicroStrategy carries no debt and has $68 million in cash. Revenue of $106.4 million in 1998 was nearly double that of 1997.

Schaff projects the company will earn 30 cents per share this year, meaning the stock trades at 71 times 1999 earnings. "My conclusion: MicroStrategy is a good company with good products," says Schaff, "but it's overvalued."

More information can be found at: www.informationweek.com

Egghead.com
Blair G. Jeffery (3/23)

Shares of Egghead.com (EGGS) surged this week after Prudential analyst Paul Merenbloom initiated coverage with a strong buy rating. But Wall Street City analyst Blair G. Jeffery disagrees with the recommendation, saying it is "just not warranted."

Merenbloom told clients that Egghead, a reseller of PC software, hardware and related products, "represents a unique e-commerce vehicle combining auctions, liquidations and superstores." But Jeffery says the firm has not posted a profit for four quarters. He also points out that, at 12%, Egghead has the worst average in the industry for gross profit margin.

It may be possible for Egghead to hit the 30 share price target Prudential has set (it is trading around 20) if it can find a way to both increase sales and improve its profit margin, says Jeffery, but "right now, the firm does not appear to have any such efforts in place."

More information can be found at: www.wallstreetcity.com

Launch Media
Chris Nerney (3/25)

Recent deals with Sony Music Entertainment "should significantly enhance" the value of Launch Media, a music-oriented Web company that has filed for an initial public offering, says Internetnews.com analyst Chris Nerney.

The deal will allow Launch to offer its members music videos from such top acts as Celine Dion and Lauryn Hill. In order to attract an audience, it's critical for independent music-oriented Web sites to gain access to A-list artists who are signed by the big labels, says Nerney. Launch revenue increased to $5 million last year from $3.1 million in 1997, while losses rose to $13.4 million from $6.7 million. Revenue growth is "unimpressive," says Nerney.

But the Sony pact, which includes a $1 million investment by the entertainment giant, gives Launch a "fighting chance" to improve its revenue growth rate, he says.

More information can be found at: www.internetnews.com

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