What will be the effect of September 11? - E-FINANCE - Statistical Data Included

We believe that the events of September 11 will negatively impact the corporate sector short term. Orders of new products, implementations of existing products, and payment for goods and services globally will undoubtedly be held up by the recent turn of events.

Essentially, two weeks were lost due to the shock of events and shutdown of services. That loss of commerce and productivity could negatively affect the business of e-learning providers, especially those that depend on the sale of a relatively small number of high-priced contracts each quarter. We think companies such as WebEx and SmartForce that book subscription-based revenue are better positioned to weather this sort of crisis and economic environment than companies that depend on mostly onetime sales of perpetual software licenses, such as Saba and Centra. Because Saba and Centra depend largely on one-time sales of perpetual licenses to meet estimates each quarter, a lost week or two of productivity and the distracted environment that has followed could have an effect on their ability to meet estimates. To Centra's credit, the demand for their products and services should increase, but the timing of recent events (two and one-half weeks before the end of the quarter) will no doubt have short-term implicat ions. In fact, our short-term concern is based on the fact that most software providers close a majority of their business in the last two weeks of the quarter, not on the functionality or reliability of their products.

Long-term, we believe the corporate e-learning and especially the collaboration providers are well positioned to benefit from the psychological and logistical issues of recent events that could permanently change corporate business practices. The recent turn of events in New York and Washington did cause airports to shut down and created a potential long-term worldwide apprehension of flying. However, we think that will spur companies to seek alternatives to air travel to complete not only time-sensitive business, but also transactions going forward.

WebEx and Centra offer collaboration technology, which enables virtual meetings, presentations, and training--thus reducing the need for companies to send employees to physical locations. WebEx has a deeper penetration in the business communication market; Centra has built a leadership position in the virtual classroom space. But both companies offer application service provider products for easy startup and Web meeting centers for ad hoc usage. In addition, SmartForce, Click2Learn, and other learning infrastructure providers offer products to deliver proprietary or third-party training curriculum online, which would also significantly reduce travel costs and time.

As companies begin to evaluate new business practices to alleviate the need to travel while maintaining and improving productivity and customer relationships, they'll have to seriously consider learning and collaboration applications.

We've cautioned investors about the companies in the corporate sector near term due to the disruption of normal business operations caused by recent events and continued weakness in the economy, which has dramatically reduced funds available for instructor-led training and e-learning initiatives.

Moreover, the tragedy will surely drive the United States into a recession, prolonging by a quarter or two any inklings of recovery.

We predict that budgets will be severely limited heading into 2002. Near term, we believe collaboration will be the only segment of the industry that has the strong possibility of increased demand for its services due to travel fears and limitations. In the event of a dramatic sell-off in the sector, we would need to revisit our investment thesis on a case-by-case basis. We recommend focusing on the better-positioned and capitalized providers in the individual niches that would benefit from the long-term success of online learning and its ability to solve some of the fundamental business practices that will be changed forever by the events of September 11.

The performance of our corporate sector in September was severely affected by the events of September 11 and the view that economic recovery will be pushed back. The sector declined 26.1 percent in September compared to the NASDAQ and Russell 2000, which were down 23.6 percent and 18 percent respectively during the month. Saba had the toughest month as it tumbled 82 percent over concerns regarding the demand for its high-end, behind-the-firewall learning management system. Smartforce, Docent, and Click2Learn all fell in sympathy. On a positive note, Raindance (up 148 percent) as well as other conferencing companies rose on the anticipated benefit of recent events on the demand for their services. The collaboration segment as a group was up 6 percent in September.

Peter L. Martin, CFA, is a senior vice president with Jefferies & Co., San Francisco. He follows various segments within the knowledge services industry, which are broadly categorized under e-learning and traditional education and training.

[Graph omitted]

                                                   Price    53 Week
Company                        Ticker    Rating         9/28       High
eLearning

Picturetel Corp                 PCTL     NR            $5.98      $8.00
Centra Software                 CTRA     Accum         $8.56     $17.14
Insightful Corporation          IFUL     NR            $2.38      $4.44
Wire One Technolgies            WONE     NR            $6.11     $11.56
Raindance Communications        RNDC     NR            $2.16      $7.06
Act Teleconferencing            ACTT     NR            $8.30      $9.75
John Wiley & Sons               JWa      NR           $20.88     $23.89
WebEx                           WEBX     Buy          $21.24     $52.13
Imanage                         IMAN     NR            $4.00      $9.13
Skillsoft Corp.                 SKIL     NR           $15.98     $38.94
Dow JOnes & Company              DJ      NR           $45.43     $64.30
Polycom                         PLCM     NR           $24.37     $72.25
VCampus Corp.                   VCMP     NR            $0.56      $4.50
FactSet Research Systems        FDS      NR           $24.26     $47.49
RWD Technologies                RWDT     NR            $1.91      $8.69
Corporate Executive Board       EXBD     NR           $26.08     $47.25
Eloquent                        ELOQ     NR            $0.88      $3.94
DigitalThink                    DTHK     NR            $7.73     $44.50
SmartForce Public Ltd. Co.      SMTF     Buy          $16.36     $57.25
Adobe Systems                   ADBE     NR           $23.98     $87.31
Innodata                        INOD     NR            $2.00      $9.25
Stellent                        STEL     NR           $14.40     $64.00
Click2learn.com                 CLKS     Accum         $2.60     $18.25
Docent                          DCNT     NR            $2.07     $27.13
Vignette Corp.                  VIGN     NR            $3.54     $34.88
Actuate Corp.                   ACTU     NR            $4.19     $37.38
Macromedia                      MACR     NR           $12.11     $85.25
Mentergy                        MNTE     NR            $0.33     $11.38
Documentum                      DCTM     NR            $8.19     $63.88
Nuance Communications           NUAN     NR            $6.50    $131.88
Interwoven                      IWOV     NR            $3.86     $67.69
Saba Software Systems           SABA     Sell          $1.98     $30.19
Speechworks International       SPWX     NR            $4.93     $99.50
Broadvision                     BVSN     NR            $0.91     $37.13
ProsoftTraining.com             POSO     Accum         $0.64     $15.00
Genesys                         GNSY     NR            $7.00     $15.29
Corporate eLearning Average

                                 53 Week          Mkt  3-Mon Avg
Company                              Low   Cap (mm)   Trdg Vol
eLearning

Picturetel Corp                    $1.75    $310.38    793,923
Centra Software                    $2.75    $207.62    448,913
Insightful Corporation             $1.25     $23.94     38,675
Wire One Technolgies               $1.44    $134.03    110,980
Raindance Communications           $0.74    $102.69    504,918
Act Teleconferencing               $3.89     $50.96     43,126
John Wiley & Sons                 $17.90  $1,022.83     50,343
WebEx                              $5.06    $727.88    929,992
Imanage                            $1.50     $86.79     88,259
Skillsoft Corp.                   $11.75    $245.07    242,020
Dow JOnes & Company               $43.19  $2,894.45    275,972
Polycom                           $10.75  $1,988.09  1,791,786
VCampus Corp.                      $0.38      $8.52      4,500
FactSet Research Systems          $17.80    $807.17    182,251
RWD Technologies                   $1.85     $29.20     11,489
Corporate Executive Board         $22.85    $817.30    431,020
Eloquent                           $0.50     $16.12     56,351
DigitalThink                       $5.34    $261.77    541,910
SmartForce Public Ltd. Co.        $13.40    $835.55  1,574,808
Adobe Systems                     $22.50  $5,455.65  4,301,560
Innodata                           $1.26     $43.66    110,561
Stellent                          $13.33    $313.14    470,318
Click2learn.com                    $1.00     $49.84    108,685
Docent                             $1.48     $88.81    269,341
Vignette Corp.                     $3.08    $933.74  3,718,249
Actuate Corp.                      $2.80    $239.88    650,023
Macromedia                        $11.30    $664.15    751,918
Mentergy                           $0.23      $4.49     25,236
Documentum                         $5.88    $311.82    446,143
Nuance Communications              $5.65    $221.30    949,154
Interwoven                         $3.11    $372.83  3,323,221
Saba Software Systems              $1.52     $78.22    746,525
Speechworks International          $4.10    $141.24    387,064
Broadvision                        $0.68    $270.22  3,944,221
ProsoftTraining.com                $0.56     $14.57    240,672
Genesys                            $4.55    $182.51     14,779
Corporate eLearning Average                 $554.34    793,858

                                           Return(%)
Company                              1-Mo.   3-Mo.     6-Mo.
eLearning

Picturetel Corp                        11.7    19.1     111.3
Centra Software                       -37.5   -36.3      37.7
Insightful Corporation                -42.6   -21.0      51.1
Wire One Technolgies                   35.0    25.0     163.2
Raindance Communications              147.7    74.4      14.4
Act Teleconferencing                   26.1    29.3      15.1
John Wiley & Sons                      -5.3   -12.1      10.1
WebEx                                  -3.1   -32.6     129.5
Imanage                               -25.7    12.1      51.8
Skillsoft Corp.                       -45.5   -57.3     -25.2
Dow JOnes & Company                   -21.4   -23.5     -14.3
Polycom                                 3.3    14.3      42.6
VCampus Corp.                         -40.0   -60.0     -43.5
FactSet Research Systems               -5.6   -24.0     -19.0
RWD Technologies                      -36.3   -40.9     -37.6
Corporate Executive Board             -32.5   -40.1     -19.1
Eloquent                              -15.5   -30.5      -0.6
DigitalThink                          -43.3    33.3     -14.1
SmartForce Public Ltd. Co.            -54.5   -49.1     -39.4
Adobe Systems                         -36.3   -48.5     -37.6
Innodata                              -23.0   -44.9     -64.1
Stellent                              -36.6   -56.9     -45.9
Click2learn.com                       -35.7    47.9      37.9
Docent                                -62.6   -67.4     -47.9
Vignette Corp.                        -52.3   -54.4     -44.8
Actuate Corp.                         -40.4   -41.6     -61.0
Macromedia                            -21.4   -38.7     -31.5
Mentergy                              -22.9   -56.0     -76.3
Documentum                            -47.7   -27.2     -41.1
Nuance Communications                 -43.9   -55.0     -45.0
Interwoven                            -54.9   -78.1     -72.6
Saba Software Systems                 -81.9   -86.7     -78.5
Speechworks International             -50.9   -68.0     -48.8
Broadvision                           -56.1   -80.2     -83.8
ProsoftTraining.com                   -57.5   -47.5     -92.0
Genesys                                -6.5   -36.1        NA
Corporate eLearning Average           -25.4   -29.4     -12.0

                                    Return(%)
Company                        12-Mo.      YTD
eLearning

Picturetel Corp                  -13.1   144.6
Centra Software                   22.4   113.2
Insightful Corporation             7.6    39.3
Wire One Technolgies             -34.6    37.0
Raindance Communications         -62.9    24.6
Act Teleconferencing               7.5    15.1
John Wiley & Sons                 -9.8    -3.7
WebEx                            -42.0   -11.4
Imanage                          -53.0   -18.9
Skillsoft Corp.                  -19.2   -19.7
Dow JOnes & Company              -24.8   -21.0
Polycom                          -63.8   -26.1
VCampus Corp.                    -84.8   -28.9
FactSet Research Systems         -32.5   -34.4
RWD Technologies                 -73.7   -37.6
Corporate Executive Board        -38.2   -40.9
Eloquent                         -68.7   -52.0
DigitalThink                     -81.6   -56.6
SmartForce Public Ltd. Co.       -69.6   -60.1
Adobe Systems                    -69.2   -60.7
Innodata                         -20.4   -62.9
Stellent                         -70.8   -72.6
Click2learn.com                  -82.1   -74.4
Docent                              NA   -76.0
Vignette Corp.                   -86.0   -79.0
Actuate Corp.                    -86.6   -79.1
Macromedia                       -85.2   -81.1
Mentergy                         -96.6   -81.5
Documentum                       -79.7   -83.4
Nuance Communications            -94.5   -84.4
Interwoven                       -93.4   -89.1
Saba Software Systems            -93.5   -89.3
Speechworks International        -91.2   -91.0
Broadvision                      -96.5   -91.8
ProsoftTraining.com              -95.3   -94.9
Genesys                             NA      NA
Corporate eLearning Average      -58.1   -38.0

Traditional

                                                   Price    53 Week
Company                        Ticker    Rating         9/28       High
eLearning

New Horizons Worldwide, Inc.    NEWH     NR           $11.52     $18.70
Learning Tree International     LTRE     NR           $20.30     $59.75
Provant, Inc.                   POVT     Hold          $0.38      $7.94
Corporate Traditional Average
Total

                                 53 Week          Mkt  3-Mon Avg
Company                              Low   Cap (mm)   Trdg Vol
eLearning

New Horizons Worldwide, Inc.      $11.00    $125.34     26,211
Learning Tree International       $14.50    $391.36    144,792
Provant, Inc.                      $0.32      $8.29    104,552
Corporate Traditional Average               $175.00     91,852
Total                                       $525.16    739,858

                                           Return(%)
Company                              1-Mo.   3-Mo.     6-Mo.
eLearning

New Horizons Worldwide, Inc.           -5.7   -11.8     -21.2
Learning Tree International           -18.0   -11.6       3.6
Provant, Inc.                         -79.3   -79.5     -93.7
Corporate Traditional Average         -34.3   -34.3     -37.1
Total                                 -26.1   -29.8     -14.0

                                    Return(%)
Company                        12-Mo.      YTD
eLearning

New Horizons Worldwide, Inc.       1.5   -11.3
Learning Tree International      -60.9   -58.9
Provant, Inc.                    -94.2   -91.1
Corporate Traditional Average    -51.2   -53.8
Total                            -57.5   -39.2

Indices

                                                   Price    53 Week
Company                        Ticker    Rating         9/28       High
eLearning

Russell 2000                                         $404.87    $524.40
S&P 500 Composite                                  $1,040.90  $1,461.65
Nasdaq Composite Index                             $1,498.80  $3,778.38

                                 53 Week          Mkt  3-Mon Avg
Company                              Low   Cap (mm)   Trdg Vol
eLearning

Russell 2000                     $373.62
S&P 500 Composite                $944.75
Nasdaq Composite Index         $1,387.06

                                           Return(%)
Company                              1-Mo.   3-Mo.     6-Mo.
eLearning

Russell 2000                          -18.0   -20.7     -13.2
S&P 500 Composite                     -13.6   -15.9     -13.8
Nasdaq Composite Index                -23.6   -29.6     -25.9

                                    Return(%)
Company                        12-Mo.      YTD
eLearning

Russell 2000                     -22.7   -18.7
S&P 500 Composite                -28.6   -22.8
Nasdaq Composite Index            60.0   -40.9

COPYRIGHT 2001 American Society for Training & Development, Inc.
COPYRIGHT 2001 Gale Group