DALLAS, TX--(Marketwire - September 18, 2008) - NewMarket Technology, Inc. (
OTCBB:
NMKTE) today
released a letter to shareholders from CEO Philip Verges. In the letter,
Mr. Verges addresses share price performance in 2008 with a recent close of
$0.09 compared to the Company's book value of $0.29 per share and the fair
value target price recommendation at $0.78 per share. Mr. Verges goes on
to outline management's buyback plan.
The letter is included in its entirety below.
Dear Fellow Shareholders -
The recent events within the financial industry are historic. The serial
failure of one major financial institution after another is nothing short
of frightening. The government bailouts and policy reactions are less than
comforting. While the failures themselves are historic, the most history
making event is yet to be seen -- the recovery.
An Historic Recovery
The U.S. economy is far from down for the count though many households will
likely have to tighten their belts. Some jobs will be lost, some homes
downsized, some vacations canceled and some retirements delayed. In spite
of the recent financial industry catastrophes, the U.S. economy remains
fundamentally sound. It is always important for Americans to remember that
the stock market is not the economy. Just like there can be a disconnect
between the fundamental financial performance of a company and its share
price, the stock market's performance is not a direct indication of the
overall health of the nation's economy. With that said, the problems on
Wall Street can, and in the case of current events, probably will affect
Main Street America. Economic growth may be offset by the debt burden
resulting from the bailouts and bankruptcies, but the setbacks will be
absorbed, and growth will overcome the offset. The U.S. economy is
resilient and a recovery is coming.
Quietly Displacing the Fortune 500
While the Fortune 500 have been struggling in recent years, the small
business sector has been growing. Companies with less than 500 employees
have been hiring at a rate that exceeds the ongoing workforce reduction at
larger companies. In other words, for every job lost at big companies,
small business has been replacing that job and creating additional jobs.
The majority of the U.S. workforce today is either self-employed or working
for a company with less than 500 employees. While the financial industry
has creatively structured financial products around high-risk mortgage
portfolios, retail investors have yet to enjoy a standardized and well
regulated small business security market. For instance, it remains to be
seen if the short selling protection announced yesterday by the SEC will
truly protect small publicly traded companies. The previous Regulation SHO
Threshold List only includes 69 over the counter quoted companies.
Regulation SHO is the SEC's attempt to track the naked shorting activity in
a select group of companies and stop market manipulation as addressed by
President Bush in his speech this morning. If companies like NewMarket
aren't on that list, and aren't being tracked by the SEC, how can we expect
to be fully protected under these new short selling regulations? With that
said, we will continue to fight for the same protections being offered to
large companies and hold the SEC to its promise to cease naked short
selling for all companies.
SMB to Lead Economic and Market Recovery
When the dust settles from the emergency procedures to stabilize the
financial industry turmoil, analysts will turn their attention from
assessing the damage and begin looking for the road to recovery. Not
unlike NewMarket, there are now companies of all sizes on all markets that
are trading at discounted valuations because of the overall market turmoil.
There are many companies that are fundamentally strong but are suffering
from a crisis of confidence in the overall market. Big business,
specifically the financial industry, created this crisis, but the growing
small business sector seems the obvious path to recovery. They can change
more quickly, they are accustomed to tighter access to capital, and they
are the ones creating jobs. When investors return to the market, they will
be looking for companies that are fundamentally strong and showing growth
in the face of economic struggle.
NewMarket -- A Small Issuer Trailblazer
Since going public through a reverse merger in 2002, NewMarket has not only
built a vibrant emerging market technology service business, NewMarket has
also been a trailblazer in the small business publicly traded market. Some
of you reading here have been with NewMarket through many of its trial and
tribulations in the publicly traded small business market. The operation
has grown impressively from $2 million in revenue in 2002 to $93 million in
revenue and $7 million in net income in 2007. The Company is on track to
achieve $120 million in revenue in 2008. However, the fundamental
financial performance has yet to be realized in the Company's share price.
NewMarket -- Book Value $0.29 PPS vs. Market $0.09 PPS
NewMarket currently has a book value of approximately $62 million and a
market capitalization value of only $20 million. The book value price per
share is $0.29 compared to a recent market share price of $0.09. I know
many of you fully understand the significance of this statement, but let me
explain further. When valuing a profitable company that has an actual
fundamental financial history, book value is typically just the starting
point. The vast majority of companies are valued at a premium to book
value, not a discount. The reason for this is that theoretically, if you
were to shut down the business and liquidate, the book value is what you
would have left. Of course, this is not an exact science, but that is the
basic assumption. So, for any healthy company to be trading at a discount
to book value should be a huge signal for investors. NewMarket is trading
at less than one third of its book value. In my opinion, this represents an
incredible opportunity for investors to own NewMarket stock at an
unprecedented price. Micros Report recently released a detailed analyst
report update recommending NewMarket as a speculative buy with a fair value
target price of $0.78 (a copy of the report is available by contacting the
Company at
ir@newmarkettechnology.com).
NewMarket -- Share Price Performance in Prevailing Economic Framework
The prevailing market action is not helping the NewMarket share price, but
we are not alone. Over 50% of all publicly traded companies, not just OTC
quoted companies, have hit 52 week low share prices in 2008. The crisis in
confidence in the U.S. stock markets is causing the share price of
companies of all shapes and sizes to suffer. Most major market indexes are
off 25% or more from their peaks in 2007. The Dow Jones Industrial average
is at its lowest level since 2005. AIG, a component of the Dow Jones
Industrial Average, is now effectively gone and has been removed from the
average. The OTCBB reports share prices down 45% on average compared to
last year and liquidity down 53%.
NewMarket -- Two Year Share Price Performance $0.27 PPS
A broader consideration of NewMarket's share price presents a more
optimistic picture. The average share price in 2008 year-to-date is $0.14.
The average share price in 2007 was $0.31. However, in 2007 the dollar
value of total trading exceeded $80 million dollars and the dollar value of
total trading in 2008 is approximately $16 million. In other words, there
has not been a great deal of trading volume at the lower average share
price in 2008. In fact, the average share price for 2007 and year-to-date
2008 combined is $0.27. While some shareholders are exiting, most are
holding on.
NewMarket -- Future Share Price Performance Potential
Even at a two year average of $0.27 per share, the market price is still
below the Company's book value per share. The Company's assets are
increasing and liabilities are decreasing. Revenues continue to grow and
margins continue to improve. The recent analyst report recommendation based
on market comparables would result in a market capitalization value of
approximately $150 million compared to the current market capitalization of
roughly $20 million. Given the prevailing economy, market turmoil, and the
current state of regulatory protection for small public issuers, management
considers the optimum market capitalization unlikely, though management
does anticipate dramatic share price increases are possible at any time.
Fundamentally the Company is strong and growing and by generally accepted
valuation methodologies, is well undervalued.
NewMarket -- Founders and Management Buyback
The NewMarket founders and management believe the optimum market value can
only be achieved through a new listing on an upgraded exchange. NewMarket
founders and management are currently seeking investment sponsorship to
back a buyback of a controlling interest in conjunction with a move to an
upgraded exchange. For more details on this topic please listen to our
Webcast from last week. A link to the Webcast is available on the Company's
corporate Website Investor Relations page at
www.newmarkettechnology.com/investor-relations.htm titled "NewMarket
Technology Year-to-Date Corporate Update" under "Current Events and
Communications."
NewMarket founders and management are confident in the Company's emerging
market technology service business model. We believe NewMarket's small
public issuer experience presents an even more compelling return on
investment opportunity in conjunction with an anticipated economic recovery
lead by a small business sector.
The NewMarket management and founders remain enthusiastic about the future
of the Company and committed to realizing that future. We thank you for
your ongoing support. We encourage you to contact the Company to answer
any questions or clarify any concerns. We welcome and encourage your
feedback.
Best Regards,
Philip Verges
Founder and 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 (
OTCBB:
NMKTE), previously under NMKT (
OTCBB:
NMKTE), helps
clients maintain the delicate balance between maintaining legacy systems
and gaining a competitive edge from the latest technology innovations.
NewMarket provides certified integration and maintenance services to
support the prevailing industry standard solutions such as Microsoft, 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. In 2006, the company continued its rapid
growth, reporting $77.6 million in revenue with a net income of $5.8
million.
Contact Information: Contact:
NewMarket Technology, Inc.
Investor Relations
214-722-3065
ir@newmarkettechnology.com
www.newmarkettechnology.com