by InteractiveAdvisors
by InteractiveAdvisors
Strategies

Tuttle: Why Constant Contact looks clunky

by |Published

Author: Kris Tuttle

Covestor model: Soundview Technology

Disclosure: None

We know the insides and outs of email mar­ket­ing and even online social net­work­ing. But have always failed to grasp Con­stant Con­tact (CTCT).

Our takeaway after meeting with management is that the company provides lots of hand-holding for one and two-person companies that do not have any technology skills.

That’s hardly an excit­ing investment.

We first talked about the stock as a short back in Octo­ber of 2007 at $24 and pub­lished a fuller note on the com­pany with a $14 intrinsic value esti­mate in Feb­ru­ary of 2008.

Most of the negative thesis of that research report remains true.

But acqui­si­tions, espe­cially the recent pur­chase of Sin­gle­Plat­form, have now blurred the pic­ture even more.

We’ve uploaded the report and here is the link (PDF): Con­stant Con­tact CTCT Update Feb­ru­ary 2008

Spend­ing $100 million for SinglePlatform, an also-ran in the online restau­rant menu and pro­mo­tion space, is not good. The num­ber of employ­ees is rather small and only about $5 million has been invested in the com­pany.

That’s one hell of a premium.

If Constant Contact had acquired this com­pany for $15-20 million, I think we would all give man­age­ment the ben­e­fit of the doubt and at least give them credit for being a dis­ci­plined buyer.

But that’s not the case here.We also note that there are larger and more suc­cess­ful pri­vate com­pa­nies like yext.com in this space.

Not every­one out there fol­lows our Twit­ter stream so you may have missed a quote we took from an online forum on email mar­ket­ing where experts expressed the fact that,“you prob­a­bly won’t go wrong in choos­ing any lead­ing plat­form from Mailchimp to Awe­ber as long as you don’t end up with Con­stant Contact.”

Constant Contact is not out to impress any­one who is tech­ni­cally savvy.

But in this world of “con­sumer dri­ven IT”, that strat­egy is not work­ing.

Con­sumers and their gen­er­ally avail­able tech­nolo­gies just keep get­ting better. And Constant Contact keeps look­ing clunkier.

AUTHOR

Kris Tuttle
Kris Tuttle
SoundView's two senior partners, Kris Tuttle and Stephen Waite, have over 30 years of experience each in emerging technologies, equity research and asset management. Both have run large organizations and multibillion dollar equity portfolios. SoundView has access to numerous proprietary and private sources of information and has the ability to process and organize information around our specialty better than other investors.

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