MapQuest's services turn heads on the Street
As more consumers turn to the Web to "get things done," newly public companies such as MapQuest, an online map provider, are poised to thrive.
Although their business is relatively small at present, MapQuest and other online map and direction services largely have gotten signs of approval from analysts because of the Net's ability to offer more useful and personalized data than traditional media.
In a January report by research firm Jupiter Communications, analysts wrote that "consumers are overwhelmingly more satisfied with maps and directions online than they are with those offline; 71 percent of consumers said online maps and directions are more valuable than traditional media."
MapQuest, which has been offering maps and driving directions online since 1996, went public last month and since has been given "buy" or "strong buy" recommendations by a number of analysts, who observe that the company is among the leaders offering similar services, even with almost no promotion. The New York company last week reported first-quarter earnings that beat Wall Street's expectations.
Like many Internet companies, however, MapQuest faces plenty of challenges. For one, the stock--caught up in the recent bearishness among Net stocks--is trading below its initial offering price of $15 per share. It has traded as high as $28 and as low as $13 since going public.
MapQuest also is unprofitable. "We have a history of losses and we expect to continue to lose money in the foreseeable future," the company said in a regulatory filing earlier this year.
The company faces stiff competition, too. Microsoft, for one, offers Expedia Maps as part of its Microsoft Network online service.
In addition to offering many of the same functions as MapQuest such as maps and driving directions, Expedia Maps ties together other Microsoft and MSN content. For example, a search on a San Francisco address yields a map, area weather, and local news from MSNBC; links to local events, restaurants, sports, and entertainment listings from the Sidewalk local guides; and facts about the city from Encarta.
In recent weeks, however, MapQuest has added new features and partnerships aimed at anticipating online users' needs, according to chief executive Mike Mulligan. It introduced a personalized service, not surprisingly named My MapQuest; became part of the Wireless Application Protocol Forum, which is developing standards for information and telephony services for wireless devices; and its map and driving direction services are being offered on 3Com's Palm VII handheld computer.
This comes in addition to the company's existing partnerships, with portals such as Yahoo and Lycos as well as with businesses such as Staples, Sears, Kinko's, and Blockbuster, Mulligan said. The company also "publishes or provides the relevant geographic data for printed road maps, atlases, travel guides, hotel and telephone directories, maps used in textbooks and reference books, and CD-ROMs," according to its Web site. In addition, the company offers geographic database development and consulting services to other businesses.
Many analysts are bullish on MapQuest, calling the company's relatively low stock price an opportunity to buy in to what promises to be a big player in the future. MapQuest last week reported first-quarter revenues of $6.2 million, up from $5.6 million in the like quarter last year. It reported a net loss of $2.8 million for the quarter or 10 cents per share. A consensus of analysts had estimated the firm would lose 11 cents per share for the quarter, according to First Call.
The company also enjoys sizable market share in the space, and its customers include Chevron, MasterCard, and Gannet, among others.
"MapQuest.com is the most heavily trafficked mapping site on the Web, with an average of 2 million page views per day, representing an estimated 64 percent share of mapping site page views and ranking ahead of Expedia Maps, MapBlast, and MapsOnUs," Keith Benjamin, an analyst for BancBoston Robertson Stephens, wrote in a research report earlier this month. "This has been accomplished with virtually no promotion over the past year beyond word of mouth. Subsequently, the company has planned a $2 million promotional campaign to further increase usage.
"In addition, MapQuest.com has 2 million members who have registered with their name, email address, and other data, with over 5,000 new members registering daily," Benjamin added. "Accounting for 6 percent of revenues in 1998, we estimate consumer revenues will grow to 30 percent by 2002."
The Net is only part of MapQuest's business plan, which initially pushed down its valuation but should help it grow in the future, according to Hany Nada, senior analyst with U.S. Bancorp Piper Jaffray. He has a "strong buy" rating on the company.
The company's "core mapping business, which is about half of its business this year, will help differentiate MapQuest from the pure Internet businesses," Nada said in an interview.
The success of online mapping services "is not only due to extensive information but the personalization capabilities that online maps offer: the ability to plot a trip from starting point to arrival, combined with the ability to view maps from multiple points of view, with greater or less detail," according to the Jupiter report. "Online mapping will continue to be an effective source of information for standalone sites targeted toward a broad consumer audience."