MapInfo Charts New Territory

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By David Langford
December 7, 2000

MapInfo Corp.

Ticker: Nasdaq: MAPS
Phone: (518) 285-6000
Website: http://www.mapinfo.com/
Price (12/6/00): $40.94

How Did It Double?

MapInfo, after years of uncertainty and a swooning stock price, has finally started to gain traction.

Like many e-service companies, MapInfo has targeted an inefficiency. It develops mapping software products that provide location-based solutions and services that help businesses better understand their customers.

In essence the company aims to help a form of commercial blindness. For businesses that have no idea where their customers are, MapInfo answers all kinds of relevant questions: What is the market potential of a given area or market segment? What is the best cell phone coverage plan? What is the customer's current location? Intended location? Where's the best place to build a new store? Customers, too, can find out all sorts of information once location becomes known (Can I get DSL at home? Can I get driving directions to this place?).

All of these examples come from announcements the company has made in the last few months, including MapInfo's recent deal with Oracle (Nasdaq: ORCL) and also other deals with Sprint (NYSE: FON) and a host of other big players. These deals, the maturing and increasingly profitable business, and MapInfo's lack of competition, have caught investor attention. The e-services story, in this instance, appears to be coming true.

Business Description

MapInfo is a rising star in the business intelligence market, and what it brings to that market better than anyone else is location. MapInfo can tell you, with increasing specificity as the world becomes more wired, where your customers are, where they use your services, where they have trouble accessing your services, and where your competitors are making inroads -- for that matter, where your customers shop, bank, work and live. In a word: location, location, location.

As the world grows increasingly wired, and especially as the world goes wireless, MapInfo promises to mature into the leader of its space. Younger competition doesn't have much chance of breaking into MapInfo's comfortable lead, and strong potential competitors like Autodesk (Nasdaq: ADSK) and ESRI haven't started marketing their products in the way MapInfo has. MapInfo's largest challenge today isn't competition, but establishing a foothold in Japan, where wireless has a more robust presence than it does in the U.S.

Financial Facts

Income Statement
12-month sales: $96.2 million
12-month income: $8.1
12-month EPS: $0.54
Profit Margin: 8.4%
Market Cap: $610.00 million [12/01/2000] 14.9 mill shares

Balance Sheet:
Cash: $39 million
Current Assets: $67.7 million
Current Liabilities: $27.9 million
Long-term debt: $0

Ratios:
Price-to-earnings: 75.8
Price-to-sales: 6.3

How Could You Have Found This Double?

MapInfo's transforming partnership with Oracle happened in 1999, a couple of years after the company shifted course to its present direction -- a change concurrent with the company's rise in revenues and margins. By looking for e-service companies that fulfilled a genuinely valuable niche (as opposed to the generic, and doomed, socks.com), yet had mature vision, smart partnerships, and were actually cash-flow positive, one could have discovered MapInfo.

This is one case where the investor had to think carefully about why the company is pursuing its particular line of attack. That, coupled with a basic knowledge of how e-services work, might have shed a little light on MapInfo's budding business plan. Even then, though, it could easily have been missed -- MapInfo appeared to have little else on tap. Admittedly, this one was obscure. But it isn't so obscure anymore.

Where to From Here?

With little in the way of competition, MapInfo is growing unfettered. As the wireless world expands, the company stands to benefit exponentially. The company is currently on the Foolish 8 spreadsheet and has been so since July.

The company has achieved some initial success with government deals and particularly with cellular contracts. But even as those business lines are just now developing, MapInfo must cross over into retail. Here's an example of how it might work: Around 4:00 p.m. customers within five miles of a local restaurant they frequent are sent tonight's specials. The same kind of thing applies to all the merchants the customer is near to and visits often, making for a kind of wireless market amongst the bricks and mortar. This possibility and all it might mean will begin to become a reality over the next 12 months.

Expanding possibilities besides retail are still numerous and large for this company. Government, marketers, and utilities, for example, have only a dim awareness of MapInfo's remarkable potential to streamline their operations. The company's primary job right now is to make others aware of its existence and usefulness. And why not? It's got something quite a few people will want.

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