Repeat Buyers Boost Eloquent Inc. IPO


by Hal Plotkin
Silicon Valley Correspondent

Repeat business from a strong list of major customers has already pushed shares of Eloquent Inc. {ELOQ} higher.

Eloquent Post-IPO Stock-Performance Chart

The company priced its 4.5 million offering late Thursday at 16 a share, above its stated range of 12 to 14. That range was upped from an original zone of 10 to 12.

“Those customers must be getting their money’s worth,” says Ellen Julian, director of human resourcing and training research at International Data Corp., based in Framingham, Mass. “It also shows that there really aren’t any big name players out there that compete with Eloquent.”

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Eloquent, of San Mateo, Calif., sells multimedia presentation development products and services to a growing list of blue-chip customers such as Cisco Systems Inc. {CSCO}, IBM {IBM}, Lucent Technologies Inc. {LU} and Microsoft Corp. {MSFT}. The firm shoots, edits, and produces CD-ROM or Web-based presentations that include video, audio, text and graphics in a single media product. Eloquent has also developed technology that gracefully degrades multimedia presentations in multi-user environments where network bandwidth is limited.

Customers use Eloquent’s services to produce multimedia presentations for everything from corporate communications to distance learning.

“One of the things that intrigues me most about Eloquent is the wide variety of applications for their technology,” says Guy Creese, a senior analyst at the Aberdeen Group, based in Boston.

Eloquent’s technical expertise, combined with the trend toward outsourcing, have helped the company carve out a leading position in a market that appears poised to explode. Overall, the market for e-learning solutions is expected to mushroom to $7.1 billion by 2002 from $234 million in 1997, according to IDC.

Even at $20,000 a pop or more, “Eloquent’s services pay for themselves, particularly when you consider the cost of flying in 100 people for a meeting” Creese says.

What’s more, Creese says Eloquent’s technology helps the company’s customers extend the reach of their best communicators and combine those skills with all the other information needed to generate sales or make sure employees are properly trained.

“Eloquent is helping companies change and improve their business processes,” Creese says.

One Eloquent customer, Ascend Communications, now a part of Lucent Technologies, for example, used the firm’s services to produce a multimedia presentation designed to keep employees informed about product changes.

“Eloquent gives us a quick and cost-effective solution for deploying sales education and new product information to employees around the world,” says Scott Gleason, Ascend’s director of sales education, in a testimonial on the Eloquent Web site.

Although the company lost more than $10 million on sales of $8.3 million for the nine months ended Sept. 30, analysts say they are impressed by the fact that 90 percent of Eloquent’s customers are repeat buyers. “It means they’re delivering value,” Creese says.

One possible trouble spot for the company is related to that success. All told, just 15 customers account for almost half the firm’s revenue, according to Eloquent’s IPO filing with the SEC.

Even so, Creese says he doesn’t think Eloquent’s customers will find the firm’s services easy to replace, though there are dozens of companies that sell multimedia presentation development services, ranging from big firms, such as Andersen Consulting, to smaller regional players who use technology from companies, such as Seattle-based RealVideo Inc.

Creese says that in most cases customers using those more-traditional multimedia development services must often devote considerable time and attention to creating the presentations, often employing an in-house multimedia specialist.

Turnkey provider Eloquent, by contrast, delivers finished multimedia presentations in as little as nine days.

“Eloquent is the first company to productize those services,” Cresse says. “The speed is a big advantage. The other thing is cost. Most companies don’t want to keep a multimedia expert on hand all the time if they only need to produce a few presentations a year. They’d prefer to let an outside company handle it.”

Creese says Eloquent’s track record of repeat customers proves “that if they’re not the only game in town, they’re a real good game in town.”

Ellen Julian, of IDC, adds that Eloquent has been smart to position itself in the multimedia services market, in addition to selling multimedia-development tools. “We believe the services market represents the highest growth area,” she says. “Eloquent provides excellent features for linking content and navigation which are critical for eLearning today.”

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