DALLAS, TX--(Marketwire - June 19, 2008) - NewMarket Technology, Inc. (
OTCBB:
NMKT) today
released a letter to shareholders from Philip Verges, the Company CEO. The
letter is included in its entirety below:
Dear Fellow Shareholders -
The Company has recently made a number of announcements regarding several
topics. In response to some of the announcements, we have received a number
of shareholder questions. In hindsight, a few of the announcements may not
have adequately explained the relevant shareholder value.
First off, I apologize. I am collaborative by nature and NewMarket's
communications reflect my collaborative nature. The collaborative approach
has resulted in providing NewMarket with a flow of sales opportunities and
acquisition targets that I contest as unprecedented for a company of our
size. We have also generated invaluable feedback from shareholders that has
substantially contributed to the ongoing evolution of NewMarket's business
model to continuously introduce new technologies to market. We are working
to improve our collaborative approach to sustain its benefits, but at the
same time reduce unnecessary confusion.
In the meantime, let me clarify the topics on which we have received
questions. All four topics reflect important points that specifically
enhance shareholder value.
1. Managed Services Strategy
On Monday, NewMarket announced a $4 million three year contract with
Movistar, a division of Telefonica. This contract demonstrates the
Company's strategy to transition our revenue from recurring short term
contracts into recurring revenue from long-term managed services contracts.
The recurring revenue from managed service contracts generally receives
substantially higher price to sales and price to earnings valuations than
revenue from shorter term contracts. This is because managed service
revenue is in essence, a foundation of sales that can be built upon, rather
than a sale that has to be renewed more frequently. We intend to announce
further demonstrations of our move to make managed services an increasing
percentage of our sales.
2. Debt Pay Down Strategy
NewMarket has recently communicated the retirement of a $3 million credit
facility. The debt pay down was a conscious and proactive choice by
management. We did not have to pay off the debt, but we decided it was in
the best interest of the Company and its shareholders. The terms of this
particular credit facility were contrary to our international strategy, and
its ongoing documentation requirements were consuming valuable management
resources that would be better used growing the Company.
NewMarket is internationally focused and U.S. lenders typically do not
place the same value on receivables or the other assets generated from
overseas operations as they do for those generated in the U.S. Since credit
facilities are typically secured by a company's assets, NewMarket's
existing debt is not serving the Company's strategic priorities as well as
it could, due to the bias of U.S. lenders. The majority of NewMarket's
growth is international and the terms of NewMarket's credit facilities are
not as advantageous towards international expansion as they are towards
domestic, U.S. expansion. Reducing, replacing, or eliminating this existing
debt is an improvement for shareholders and the Company. We are working
toward a full payoff, substantial reduction, or looking for new lending
partners who understand and more fully value the nature of our overseas
assets.
3. Bruce Noller's Role as President
We have recently announced Bruce Noller as the President of our Managed
Services business. Our Managed Services business was explained in detail in
a PowerPoint Webcast that can still be viewed at
http://biz.yahoo.com/cc/4/93884.html. The objective of the Managed Services
strategy is to improve the Company's value by extending the average length
of customer contracts and improving the efficiency of our regional
operations through the consolidation of our back office functions. This is
an important initiative for the Company and its shareholders. As explained
above, by transitioning the current business that represents 70% of the
Company's existing revenue into managed services, we have the opportunity
to grow sales more rapidly from a strong foundation and enjoy improved
valuation in the market. Mr. Noller is a long-time known resource who has
been involved with NewMarket for years. His understanding of the
organization and his dedication to the Managed Services business will free
me to concentrate on the Company's expansion into new markets and new
technologies.
4. John Verges' Ongoing Role
Paul Danner was recently announced as the CEO of NewMarket's Chinese
subsidiary. Mr. Danner follows in the footsteps of John Verges who served
as the founding CEO of the Company's Chinese subsidiary. The transition has
not been a sudden change, but rather a planned transition that has been in
the works for over six months. Mr. Danner and Mr. Verges have been working
side by side in China since the beginning of the year to not only introduce
Mr. Danner to all of the Company's key participants, but to make sure Mr.
Danner has a full working knowledge of the organization.
John Verges is one of the founders of NewMarket Technology, Inc. The
Company was founded by my family in 1997 and John Verges is my brother.
While he has transitioned out of the role as the CEO of the Company's
Chinese subsidiary, he has by no means left the Company. After eleven years
at NewMarket, he has acquired a broad base of experience through his
participation in the Company's expanding operations. He participated in
many company initiatives prior to the launch of NewMarket's Chinese
subsidiary, and he will participate in future endeavors as well. John
Verges will now serve as Managing Director of Red River Advisors, a third
party private entity established a year ago to serve the needs of growing
small businesses. Small businesses, particularly publicly traded small
businesses, have a need for robust and dynamic business planning, financial
planning counsel, and clear corporate communication strategies. In his new
role, John Verges will now serve in a senior corporate communications role
for NewMarket that will not only encompass the Company's Chinese
operations, but the entire organization to include Southeast Asia, Latin
America and any new market the Company enters. The communication of the
Company's strategy and fundamental financial standing to Wall Street and
the global investment community is essential to the Company's ongoing
growth, its plans to expand well beyond $100 million in annual revenue, and
the long-term market value of the Company.
Thank you for your feedback. While our collaborative communication style
may have resulted in some inadvertent confusion, it nevertheless has
generated great feedback that has helped me to make NewMarket a stronger
Company. With the focused efforts of Paul Danner, Bruce Noller, and John
Verges, we will strive to improve the Company's communications, reduce
unnecessary confusion, grow the company and increase its value in the
marketplace.
Thank you for your consideration and best regards,
Philip Verges
CEO
NewMarket Technology, Inc.
Corporate E-mail Updates
To be added to NewMarket Technology's e-mail database to receive company
updates or to obtain more information on the Company, please send an e-mail
to
ir@newmarkettechnology.com or call 214-722-3065.
About NewMarket Technology, Inc. (
www.newmarkettechnology.com)
NewMarket helps clients maintain the delicate balance between maintaining
legacy systems and gaining a competitive edge from the latest technology
innovations. NewMarket provides certified systems integration and
maintenance services to support the prevailing industry standard solutions
from companies such as Microsoft, Oracle, Infor, Cisco Systems, SAP, Siebel
and Sun Microsystems. Concurrently, NewMarket continuously seeks to acquire
emerging technology assets to incorporate into an overall product portfolio
carefully packaged to complement the prevailing industry standard
solutions.
NewMarket delivers its portfolio of products and services through its
network of Solution Integration subsidiaries in North America and the
leading emerging markets around the world to include Latin America, China
and Singapore.
NewMarket ranked Number One in Texas, Number Three in the United States and
Number Five in North America on Deloitte's 2006 Technology Fast 500, a
ranking of the 500 fastest growing technology, media, telecommunications
and life sciences companies in North America. Rankings are based on
percentage revenue growth over five years, from 2001-2005. The Company grew
from less than $1 million in revenue in 2001 to over $50 million in
profitable revenue in 2005.
The company has continued its rapid growth, reporting $77.6 million in
revenue with a net income of $5.8 million in 2006 and most recently $93.1
million in revenue with a net income of $7.3 million in 2007.
"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This press release contains forward-looking statements that involve risks
and uncertainties. The statements in this release are forward-looking
statements that are made pursuant to safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Actual results, events and
performance could vary materially from those contemplated by these
forward-looking statements. These statements involve known and unknown
risks and uncertainties, which may cause NewMarket's actual results in
future periods to differ materially from results expressed or implied by
forward-looking statements. These risks and uncertainties include, among
other things, product demand and market competition. You should
independently investigate and fully understand all risks before making
investment decisions.
Contact Information: Contact:
NewMarket Technology, Inc.
Investor Relations
ir@newmarkettechnology.com
214-722-3065
www.newmarkettechnology.com