|I didn't expect the move to 10. Now we have to wait and see what the analysts think about it. They will tell the herd whether to buy more or sell. Obviously, even the big boys were buying yesterday. Did you see this gem from TheStreet.com?|
National Information Consortium Hooks Up With AOL
By Joe Bousquin
8/29/00 11:48 AM ET
National Information Consortium (EGOV:Nasdaq - news) surged Tuesday after the business-to-government concern said it would team with Internet heavy-hitter America Online (AOL:NYSE - news) to revamp AOL's government services site.
NIC was up nearly 23%, or 1.59, to 8.56.
NIC will streamline AOL's Government Guide to make it easier for AOL's 23 million users to renew driver licenses, buy fishing permits, request birth certificate copies. It will access services from all 50 state governments, as well as Uncle Sam.
But investors might want to take a closer look at the terms of the deal. While the deal will include advertising revenue sharing between the two companies, NIC also will pay AOL an annual fee. And NIC will give AOL warrants to purchase 1% of its shares. Chris Vroom, an analyst with Credit Suisse First Boston, figures the deal's total cost to NIC will be $3 million to $5 million a year. (Vroom rates NIC a buy. His firm hasn't done underwriting for the company, though it was slated to underwrite a follow-on offering that NIC cancelled when the market for B2B stocks swooned.)
Companies such as drkoop.com (KOOP:Nasdaq - news) have run into problems because of big payments they made to join forces with AOL.
NIC generally disappointed analysts in its most recent quarterly report, as its revenue and usage numbers didn't compare well with other business-to-business companies.
Do some DD before buying. Like I need this guy to tell me that?