Viant Flies After Beating Estimates
By Cindy Christ

Investors' love affair with Internet stocks has entered a new phase, marked by a gnawing impatience for companies that bleed red ink.

Gut-wrenching volatility and the deafening mantra mouthed incessantly by market pundits that Net shares are way overvalued have left investors no other choice but to issue Internet stocks an ultimatum: make money, or it's over.

Take the case of Amazon.com, who despite reporting higher-than-expected losses this week, saw its shares explode more than 21 percent Thursday after chairman Jeff Bezos assured shareholders that their devotion would soon be requited.

Losses at Amazon.com, he said, will be a thing of the past when earnings start rolling in later this year.

So it was no surprise to self-respecting Net investors when shares in Web consultant Viant Corp. (VIAN) surged more than 20 percent Friday after crushing fourth-quarter profit forecasts.

Earlier in the week, the company enamored the market by finalizing the details of their declared 2-for-1 stock split. The payable date has now been set for Feb. 23 for shareholders of record Feb. 8.

For fourth quarter 1999, Viant reported sales of $23.7 million, a 26 percent increase sequentially and a 286 percent improvement over a year ago.

Fourth quarter net income hit $3.7 million, or 14 cents per share, versus a loss of 21 cents last year. Net income was up 137 percent over the previous quarter.

For the year ended Dec. 31, net revenues were $61.3 million, a 206 percent increase over last year. Net income for 1999 was $1.4 million, or 6 cents per share, compared to a net loss of 46 cents a share a year ago.

In addition, gross margin improved to 53 percent, versus 55 percent in the previous quarter and 40 percent a year ago.

Analysts polled by First Call/Thomsen Financial expected Viant to earn 3 cents in the fourth quarter and lose 11 cents for the year.

Viant also said it signed 10 new clients during the fourth quarter, ranging from large global companies like Polaroid and Houghton Mifflin Co. to start ups iCollege and SportsYa.

"We experienced another extremely successful quarter that enabled us to achieve profitable results for the full year 1999, far ahead of our original expectations," said Viant president and CEO Bob Gett in a news release.

Viant's earnings surprise was especially sweet to shareholders because it wasn't the first time the firm shocked the Street. In October, Viant set Wall Street a quiver after reporting an unexpected profit of 6 cents a share. Consensus estimates were for a loss of 6 cents, and shares gushed 52 percent on the news.

Now that it's soundly profitable, suitors in the analyst community are singing Viant's praises.

On Friday, SG Cowen reiterated its "buy" rating on the company and raised 2000 earnings estimates to 36 cents from 16 cents. Sales were upped to $124.5 million from $116 million.

For 2001, Cowen estimates Viant earnings per share of 50 cents on sales of $187 million.

Credit Suisse First Boston analysts Mark Wolfenberger and Wayne Segal chimed in, raising their fiscal 2000 earnings estimates to 37 cents from 25 cents and price target to $125 from $85.

Credit Suisse, which rates Viant a "strong buy," also raised 2000 revenue estimates to $125 million from $118 million, and set 2001 EPS at 50 cents and sales at $185 million.

Boston-based Viant and other Net services firms like Sapient Corp. (SAPE), USWeb/CKS (USWB) and Razorfish (RAZF), are all benefiting from an unprecedented push for businesses to establish a Web presence and electronic commerce strategy.

Viant helps companies get on the Web, providing strategic and e-commerce consulting, creative design and technology services. Viant also helps businesses build extranets, which allow companies to share information with suppliers and other businesses, and intranets, internal communications networks allowing businesses to distribute information to employees.

Shares in Viant began trading last June in an Initial Public Offering priced at $16 per share.

Growth in Internet and e-commerce services is projected to mushroom tenfold from around $7.8 billion today to $78.6 billion in 2003, according to market research firm International Data Corp.

And while there are about 75 Internet services firms specializing in e-commerce, there's more demand than they can handle.

So what's not to love about Viant?

Admittedly, the attraction pales based on valuation.

Using 2001 estimates of 50 cents and today's $105.63 closing price, Viant trades at 211 times next year's earnings.

That's no bargain.

But with the real possibility that virtually every business will need a Website someday, Viant Corp. makes an alluring candidate for long-term portfolios. And if the Nasdaq continues its unstable ways, quick-footed investors may get a better chance to tie the knot with this proven winner.