EASY Easylink Services Corp CL A (MM)

Dutton Associates updates its coverage of EasyLink Services (Nasdaq:EASY) maintaining a Speculative Buy rating and a 12-month price target of $5.20. The 9-page report by Dutton senior analyst Joe Noel is available at www.jmdutton.com, and from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. EasyLink provides its clients with an assortment of outsourced electronic tools that allows them to transform manual and paper-based business functions into automated electronic transactions. EasyLink�s networks facilitate transactions that enable the movement of money, materials, products, and people, such as insurance claims, trade and travel confirmations, purchase orders, invoices, shipping notices and funds transfers, among many others. EasyLink manages tens of millions of electronic messages and transactions per month for more than 20,000 companies, including over 400 of the Global 500. The September 2006 quarter was disappointing for EasyLink investors in terms of revenue generation, operating expenses and EPS. The increase in gross margins to just over 61%, exclusive of one-time items, which yield a reported gross margin of over 63%, is exciting in our opinion. Management�s guidance for the December quarter of 2006 is for revenues of $17.6 to $18.1 million. We believe this company has significantly under-utilized assets in its fax services that can be put to better use either through new product introductions, sales of certain assets or possibility of the sale of the entire company. We strongly believe EasyLink as an acquisition target is worth well more than the current market capitalization of approximately $30 million, and we specifically point to J2 Global Communications which trades at approximately 7X projected 2006 revenues while EasyLink trades at approximately .4X projected 2006 revenues. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 29 analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its institutional-quality research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $39,500 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $83,500 from the Company for 13 Research Reports with coverage commencing on 9/04/2002. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing. Dutton Associates updates its coverage of EasyLink Services (Nasdaq:EASY) maintaining a Speculative Buy rating and a 12-month price target of $5.20. The 9-page report by Dutton senior analyst Joe Noel is available at www.jmdutton.com, and from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. EasyLink provides its clients with an assortment of outsourced electronic tools that allows them to transform manual and paper-based business functions into automated electronic transactions. EasyLink's networks facilitate transactions that enable the movement of money, materials, products, and people, such as insurance claims, trade and travel confirmations, purchase orders, invoices, shipping notices and funds transfers, among many others. EasyLink manages tens of millions of electronic messages and transactions per month for more than 20,000 companies, including over 400 of the Global 500. The September 2006 quarter was disappointing for EasyLink investors in terms of revenue generation, operating expenses and EPS. The increase in gross margins to just over 61%, exclusive of one-time items, which yield a reported gross margin of over 63%, is exciting in our opinion. Management's guidance for the December quarter of 2006 is for revenues of $17.6 to $18.1 million. We believe this company has significantly under-utilized assets in its fax services that can be put to better use either through new product introductions, sales of certain assets or possibility of the sale of the entire company. We strongly believe EasyLink as an acquisition target is worth well more than the current market capitalization of approximately $30 million, and we specifically point to J2 Global Communications which trades at approximately 7X projected 2006 revenues while EasyLink trades at approximately .4X projected 2006 revenues. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 29 analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its institutional-quality research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrollment in our one-year continuing research program is US $39,500 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $83,500 from the Company for 13 Research Reports with coverage commencing on 9/04/2002. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.