E - Finance - learning content management systems - training company securities

What's all the hoopla?

Since the last column, there has been a tremendous amount of hoopla about LCMSs (learning content management systems), or what we at Jefferies & Co. term knowledge management systems (KMSs). Centra, Click2Learn, and KnowledgePlanet have recently made acquisitions of KMSs to enhance their product offerings. We think that was a wise decision on their part and a keen way to differentiate themselves, especially for Centra and Click2Learn.

We view the KMS application as a great niche product that actually begins to deliver on the early promise of e-learning to personalize the learning experience of users. We believe KMSs or LCMSs have a bright future, but we'd let out some of the air in the hype generated by various research groups. I'd hate to see this technology become the next pinata of e-learning at such an early stage of deployment. Based on our due diligence, we estimate that only 100 to 200 KMSs are currently up and running--a fraction of other, more established e-learning applications.

If you're unfamiliar with KMSs, they manage and deliver learning objects at the request or according to the profile of the learner. KMSs let you create and receive granular information, or chunks, as opposed to content blocks that traditionally put the onus on learners to ferret out what they need in order to have a successful learning experience. KMSs are learner-centric and prescriptive.

We've stated in the past that small suppliers will be put out of business due to lack of capital and distribution channels. In our minds, the larger and better-capitalized LMS and LCMS providers will champion further development of this value-added application. KMSs will either be embedded in an LMS offering or as a product module add-on. The robust features, functionality, and scalability of large LMS platforms will enable early KMS offerings to be honed and strengthened.

We think those improvements will, in the end, give the products more value in the marketplace and that, over time, they'll be a required aspect of human capital management. platform deployments.

An update

To follow up on our August topic of earning reports and future insight, of the 20 companies in our corporate training universe that reported, 16 either met or exceeded expectations. On a disappointing note, two firms on our list--Caliber Learning and HearMe Corporation--ceased operations.

Despite above-average performance by our reporting companies, it's apparent that the economy is continuing to weigh heavily on the sales cycle. The companies' management teams hesitate to raise guidance (upwardly revise earnings estimates) despite relatively positive second-quarter results. In some cases, companies are going to maintain past guidance through the use of cost-cutting measures, which brings about a quality of earnings issue that's a red flag to Wall Street. All and all, the tone was cautious on conference calls with management at those companies regarding 2Q earnings in terms of predicting future performance.

The declining nearly 7 percent performance of our corporate sector in July reflected the hesitant posture of management . That's compared to the NASDAQ and Russell 2000, which were down 6.4 percent and 5.5 percent. Shining stars during July were Digital Think, up 107 percent on a strong earnings call, and Click2learn, up almost 90 percent as it strengthened its technology platform and financial position. YTD, Centra is still far and away the best performing stock in the sector--up more than 300 percent.

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.

Company                                           Price    52 Week
eLearning                     Rating  Ticker       7/31       High
Centra Software Inc           NR      CTRA       $16.36     $17.14
Insightful Corp               NR      IFUL        $3.19      $3.25
VCampus Corp                  NR      VCMP        $1.57      $8.13
SkillSoft Corp                NR      SKIL       $34.65     $38.94
Futuremedia Plc               NR      FMDAY       $0.25      $1.47
Webex Inc                     NR      WEBX       $22.91     $58.00
Rwd Technologies Inc          NR      RWDT        $3.30      $8.75
SmartForce Pub Ltd            Buy     SMTF       $38.72     $57.25
Zi Corp                       NR      ZICA        $7.95      $9.44
Wiley (John) & Sons           NR      JW.A       $20.40     $23.89
DigitalThink Inc              NR      DTHK       $14.50     $58.75
Saba Software Inc             Buy     SABA       $12.85     $38.81
Polycom Inc                   NR      PLCM       $25.45     $72.25
ITC Learning Corp             NR      ITCC        $0.13      $2.00
Docent Inc                    NR      DCNT        $6.31     $27.13
Raindance Communications Inc  NR      RNDC        $1.23     $12.75
Adobe Systems Inc             NR      ADBE       $37.49     $87.31
Innodata Corp                 NR      INOD        $3.33      $9.25
Eloquent Inc                  NR      ELOQ        $1.00      $6.19
Intranet Solutions Inc        NR      INRS       $23.56     $64.00
Vignette Corp                 NR      VIGN        $7.94     $42.63
Learn2.com Inc                NR      LTWO        $0.14      $3.00
Interwoven Inc                NR      IWOV       $10.29     $68.47
Click2learn Inc               Accum   CLKS        $3.02     $18.25
Documentum Inc                NR      DCTM       $14.95     $63.88
Macromedia Inc                NR      MACR       $17.20     $90.00
Mentergy Ltd                  NR      MNTE        $0.55     $17.00
ProsoftTraining.com Inc       Hold    POSO        $1.23     $15.75
HearMe Corp                   NR      HEAR        $0.06      $9.25
Caliber Learning Network Inc  NR      CLBRQ       $0.01      $3.94
Corporate eLearning Average
Traditional
Aris Corp                     NR      ARSC        $2.53      $4.50
New Horizons Worldwide Inc    NR      NEWH       $13.68     $24.25
Learning Tree Intl Inc        NR      LTRE       $22.97     $78.88
Provant Inc                   Hold    POVT        $1.80      $9.00
Corporate Traditional
Average
Total Corporate Average
Indices
Russell 2000                                    $484,78    $542.82
S&P 500 Composite                             $1,211.23  $1,530.01
Nasdaq Composite Index                        $2,027.13  $4,259.87
Company                                       Mkt    Mon Avg
eLearning                           Low  Cap (mm)   Trdg Vol   1-Mo
Centra Software Inc               $2.75    $407.3    677,275   -3.7
Insightful Corp                   $1.25     $34.2     32,405   18.1
VCampus Corp                      $0.38     $17.2      6,389   -0.9
SkillSoft Corp                   $10.13    $549.0    153,225    1.2
Futuremedia Plc                   $0.16      $5.1     23,091   -3.8
Webex Inc                         $5.06    $851.6    570,783  -14.1
Rwd Technologies Inc              $2.35     $50.4     17,029    7.1
SmartForce Pub Ltd               $18.13  $2,054.6    877,174    9.9
Zi Corp                           $3.13    $294.8     55,163    6.7
Wiley (John) & Sons              $17.90  $1,001.6     44,443  -13.7
DigitalThink Inc                  $5.34    $510.2    498,985  106.6
Saba Software Inc                 $3.56    $578.2    523,734  -21.7
Polycom Inc                      $10.75  $2,111.8  1,148,745   10.2
ITC Learning Corp                 $0.12      $0.5      2,283  -48.0
Docent Inc                        $2.75    $264.8    304,574  -36.9
Raindance Communications Inc      $0.94     $57.9    157,572  -14.6
Adobe Systems Inc                $24.56  $8,955.0  3,997,036  -20.2
Innodata Corp                     $2.19     $71.0    250,100    8.1
Eloquent Inc                      $0.50     $18.0    100,289  -18.7
Intranet Solutions Inc           $14.75    $527.3    559,772  -38.1
Vignette Corp                     $3.63  $1,948.0  5,049,936  -10.5
Learn2.com Inc                    $0.13      $7.4    131,669  -30.0
Interwoven Inc                    $5.84  $1,058.7  3,600,185  -39.1
Click2learn Inc                   $1.00     $54.7    130,309   86.4
Documentum Inc                    $5.88    $562.6    573,262   15.7
Macromedia Inc                   $13.38  $1,021.9  1,187,248   -4.4
Mentergy Ltd                      $0.35      $5.0     25,735  -45.0
ProsoftTraining.com Inc           $1.03     $28.9    307,815   -1.6
HearMe Corp                       $0.04      $1.7    255,709  -85.4
Caliber Learning Network Inc      $0.01      $0.1     39,763  -26.7
Corporate eLearning Average                $768.3    710,057   -6.9
Traditional
Aris Corp                         $1.10     $28.6     82,577   -2.7
New Horizons Worldwide Inc       $11.00    $136.3     42,660   -8.4
Learning Tree Intl Inc           $14.50    $441.8    183,145    0.0
Provant Inc                       $1.40     $39.1     41,448    0.0
Corporate Traditional                      $161.4     87,457   -2.8
Average
Total Corporate Average                    $696.9    636,810   -6.4
Indices
Russell 2000                    $419.70                        -5.5
S&P 500 Composite             $1,081.19                        -1.1
Nasdaq Composite Index        $1,619.58                        -6.2
Company                              Return (%)            YTD
eLearning                     3-Mo.       6-Mo.  12-Mo.
Centra Software Inc            78.2       109.4   114.6  322.2
Insightful Corp                45.0        79.1    39.8  100.2
VCampus Corp                  -21.4         4.3   -79.1   85.5
SkillSoft Corp                 26.2       132.9   146.4   84.8
Futuremedia Plc                56.3       -33.3   -81.0   33.3
Webex Inc                      91.6        25.5     9.7    9.7
Rwd Technologies Inc           -6.0       -30.5   -42.6    7.8
SmartForce Pub Ltd              7.6        -3.5   -12.5    3.1
Zi Corp                       -11.8       -11.7     7.8   -0.2
Wiley (John) & Sons             9.4         1.9    -6.7   -5.1
DigitalThink Inc               69.2         7.9   -70.7  -15.0
Saba Software Inc              60.6        -9.8   -37.3  -18.4
Polycom Inc                     9.6        -9.7   -46.3  -20.9
ITC Learning Corp             -27.8       -27.8   -93.5  -27.8
Docent Inc                     22.5       -46.9      NA  -27.9
Raindance Communications Inc  -26.3        -1.6   -84.6  -29.7
Adobe Systems Inc             -16.5       -14.2   -34.5  -35.6
Innodata Corp                 -60.1       -53.3    24.6  -39.5
Eloquent Inc                   11.2       -23.8   -76.8  -44.8
Intranet Solutions Inc        -28.8       -51.0   -37.6  -53.8
Vignette Corp                  18.5        -4.5   -76.6  -55.9
Learn2.com Inc                -63.2       -79.6   -93.8  -65.5
Interwoven Inc                -29.7       -69.3   -68.1  -68.8
Click2learn Inc                51.8       -30.0   -82.8  -69.0
Documentum Inc                 -0.1       -65.4   -36.2  -69.9
Macromedia Inc                -24.1       -47.5   -77.5  -71.7
Mentergy Ltd                  -63.8       -84.0   -96.7  -72.5
ProsoftTraining.com Inc       -59.8       -91.2   -91.9  -89.9
HearMe Corp                   -82.4       -96.1   -98.5  -90.4
Caliber Learning Network Inc  -97.3       -99.2   -99.7  -98.8
Corporate eLearning Average    -2.1       -20.8   -40.8  -14.2
Traditional
Aris Corp                     114.4        39.6   -13.9   42.0
New Horizons Worldwide Inc     -6.6        -9.6   -38.0   -1.4
Learning Tree Intl Inc          8.8       -53.5   -49.1  -53.6
Provant Inc                   -41.6       -72.4   -68.7  -58.0
Corporate Traditional          18.8       -24.0   -42.4  -17.7
Average
Total Corporate Average         0.4       -21.1   -41.0  -14.6
Indices
Russell 2000                   -0.1        -4.6    -3.2    0.3
S&P 500 Composite              -3.1       -11.3   -15.3   -8.3
Nasdaq Composite Index         -4.2       -26.9   -46.2  -17.9

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