Jewel in The Rubble - ProQuest - Company Business and Marketing

DESPITE THE CARNAGE IN THE INFORMATION AND TECHNOLOGY SECTORS, STOCKS LIKE PROQUEST'S ARE RISING ON OLD-FASHIONED PROFITS.

Ask tech investors to name a company offering content over the Internet, and most likely they'll come up with a money-losing Web site: Salon.com, iVillage, CBS MarketWatch.com.

But ask them to name one that's peddling online information at a profit, and an answer probably won't roll forth as easily. Most investors have given up on the notion that a wide audience will ever pay for text-based information over the Net.

It can be done through a slow but steady approach, though: Consider ProQuest. Subscribers to the company's service have online access to 18,000 periodicals and 7,000 newspapers, along with an archive of 1.5 million dissertations and a host of other research documents. ProQuest's best customers are schools, universities and libraries -- institutions that depend on strong research offerings while their budgets for printed materials shrink and demands for online resources grow. The shift has suited ProQuest well: Its sales are projected to grow between 11 percent and 13 percent in a year that has otherwise been tough on the information industry.

So when investors went searching for bargains that had been beaten down during last year's Nasdaq tumble, some seized on ProQuest shares. The stock fell to 15 from last year's high of 39 but has recovered to 29 in 2001.

Despite earlier forays into a variety of businesses, ProQuest has blossomed because of a business it entered only five years ago -- providing schools and libraries with access to vast amounts of information and research. The success of its profit-bearing niche has rescued it from the prolonged slump afflicting most stocks in the technology and information sectors.

Until last month the 94-year-old company was called Bell & Howell, a name more commonly associated with movie cameras. During the past 50 years, Bell & Howell diversified into areas like publishing, an industry that now makes up 40 percent of ProQuest's business.

The gradual expansion left Bell & Howell involved in so many different businesses that investors had difficulty distinguishing one from another. So the company restructured itself, separating its publishing business from the higher-growth education market.

To help spread the message, the company called itself ProQuest, named after its most popular education software. "Every college student knows the ProQuest name," says CFO Alan Aldworth. "It's our Coca-Cola."

To ProQuest's advantage, the average library isn't typically inclined to go shopping for a new research provider. ProQuest thrives on its customer renewal rates, which top 90 percent, helping the company maintain its high market share. Its clients are also relatively recession-proof.

"We're not driven by consumer revenues or advertising; we're driven by subscriptions from libraries," says Aldworth.

ProQuest's success may redefine the phrase "Internet content" for the better. For this company, the Internet isn't the commodity, the product is. Now there's a thought.

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COPYRIGHT 2001 Standard Media International
COPYRIGHT 2001 Gale Group