More good info-- JR: Merriman Morning Note: PTSEF_NTII_ARTE (11-27-07) --
11:32am PST 27-Nov-07 Merriman Curhan Ford & Co. (Fetyko, Richard 646-292-1446)
MERRIMAN CURHAN FORD & CO.
AMEX: MEM
MEMBER FINRA/SIPC
RESEARCH HIGHLIGHTS NOVEMBER 27, 2007
PTSEF: Launch of Microsoft Live Search Club; More Similar Enterprise Deals
Expected in the Pipeline; Reiterate Buy
NTII: $60M Capital Infusion Clears the Way for the Completion of Viprinex
Phase 3 Trials; Reiterate Buy
ARTE: Survey Results: Physicians and Patients Very Satisfied, ArteFill is
Safe, but Commercial Effort Needs A Booster Shot; Maintain Buy
Points International Ltd. (b, c, h) (PTSEF*)
Launch of Microsoft Live Search Club; More Similar Enterprise Deals Expected
in the Pipeline
Reiterate Buy Price: C$2.53 Market Cap (M): C$292.7
FY07 Revenue Estimate (M): Previous: No Change Current: C$32.4
FY07 EBITDA Estimate: Previous: No Change Current: C$0.7
FY08 Revenue Estimate (M): Previous: No Change Current: C$71.5
FY08 EBITDA Estimate: Previous: No Change Current: C$5.0
Although not officially announced, based on our channel checks and
findings, we believe Points International is participating in and supporting
a part of Microsoft s (MSFT $32.97, Not Rated) Live Search Club initiative.
This initiative is intended to drive user adoption of Microsoft s Live Search
engine. We believe Microsoft will begin to heavily promote its Live Search to
consumers in FY08, which should drive transactions for Points International
from this partner (Microsoft). We also believe this could be a multimillion
dollar opportunity in FY08 and is likely to be followed by similar enterprise
deployments.
Microsoft Live Search Club is a membership program intended to drive
consumers to use Live Search (web search engine) through incentives such as
miles/points. Microsoft hopes that Live Search can begin to compete for web
search market share with other top tier search engines.
Points International s involvement relates to the redemption of Microsoft
reward tickets. Live Search Club currently offers a dozen online games that
encourage players to use the Live Search engine to find the answers to the
puzzles. Users earn tickets for solving the puzzles/games, which can then be
redeemed for a variety of items, including airline miles - that redemption is
managed by Points International.
AirIncentive miles product in use. Points International has created a
custom version of its AirIncentive product, which allows consumers to redeem
their game tickets for AirIncentive miles from several airline carriers.
Consumers can choose which airline carrier s miles they want to redeem their
tickets for. The ticket-to-AirIncentive miles redemption website is powered
by Points International. Microsoft buys AirIncentive miles from Points
International, which then uses these proceeds to buy miles from individual
airlines participating in the AirIncentive program, keeping a spread between
what Microsoft pays Points International and what Points International pays
to airlines.
We expect Microsoft to heavily lean into the promotion of Live Search in
FY08, which should drive transactions and revenue for Points International
that we believe could reach $1-10M in FY08. We are reiterating our Buy rating
on PTSEF shares.
* valuation calculated using PTS.TO
-- Richard Fetyko (646) 292-1446 rfetyko@mcfco.com