Report Card: Mark Wolfenberger

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Biography

B.A., Duquesne University; B.S., Case Western Reserve University; M.S., University of Pittsburgh; M.B.A., Columbia University. Wolfenberger worked at Donaldson, Lufkin & Jenrette, Morgan Stanley Dean Witter and Deutsche Banc Alex. Brown before joining Credit Suisse First Boston in 1998 as the senior information technology services analyst and head of global services.

Industry Outlook and Style

The way Wolfenberger describes his IT service companies, they sound like purveyors of intellectual property: "They hire talented people, develop solutions and then bill the talent package out to clients." And until four years ago, he recalls, these companies were evolving in a stable and predictable manner. Then

Sapient

(SAPE)

, a provider of consulting, Web-based development and technology integration, went public. It was, says Wolfenberger, "the sign that the revolution was on."

Suddenly, a whole new breed of hot IT service companies emerged on the scene, attracting top tech talent and driving technological change.

"Internet services companies are becoming the channel to how fast the technology grows," he says. Looking ahead, Wolfenberger expects value creation through service companies such as

Viant

(VIAN)

,

Razorfish

(RAZF)

,

Proxicom

(PXCM)

,

Lante

(LNTE)

and

Rare Medium

(RRRR)

. (CSFB has provided investment banking services to Lante, Rare Medium, Razorfish, Sapient and Viant.)

The applications service provider/hosting model -- in which companies provide services ranging from hosting the client's technology to running the client's applications -- has gone from concept to reality in a year, and will continue to accelerate, says Wolfenberger. He predicts that 40% of technology will soon be sold on the ASP/hosting platform rather than being developed and maintained within the corporation.

But questions remain about implementation. "Will it be the

USIX

(USIX)

model that owns the applications and has the customer rent the solution, or the co-location model of Exodus?" USinternetworking hosts applications for companies that don't want to buy their own software, while

Exodus Communications

(EXDS)

provides storage space and management services for companies' Internet sites.)

And what about software companies, such as

Retek

(RETK)

and

Radiant Systems

(RADS)

, that host their own vertical technology solutions -- that is, solutions specific to their client bases? (Retek, for example, targets retailers.) Wolfenberger wonders whether all of them will be blown out of the water by companies that integrate multiple vertical ASPs on a common platform. One example he points to is a private company named

Jamcracker

, based in Sunnyvale, Calif.

Wolfenberger expects industry consolidation in the coming year, with convergence among ISPs, infrastructure/hosting and services companies. The first mover, he says, will still have the edge in terms of "partnerships, expansion, bandwidth, security and capital raising." He compares it to having the first pick in assembling a sports team: "Obviously the person with first choice will get the best assets."

A major concern, however, is the shortage of talent, because attracting it and keeping it are not easy in the current environment. "The talent that does exist is migrating out of the Big 5, like

Andersen

and

KPMG

, and from the traditional vendors like

EDS

and

Computer Sciences Corp

, to New Economy Web integrators," he says.

Wolfenberger is praised by the institutional investors who voted in

TheStreet.com's Analyst Rankings

for the breadth of his knowledge. "He covers it all," said one voter. Another investor commended Wolfenberger's "strong industry insight." The analyst also has a reputation for being especially well connected in a fragmented and rapidly changing environment, and is considered ahead of the pack. Notes one fan, "Mark looks forward to the next trend."

Stock Pick

Favorite stock for next 12 months:

Sapient

Comment:
"Sapient will continue to have the model and the track record that everyone wants to emulate."

Rate Their Stock Picks:

Which stock do you like best?

Kissane: First Data

Wolfenberger: Sapient

Togut: Convergys

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