THE DAY AHEAD: Getty Images may be a hidden 'dot com'

Getty Images (Nasdaq: GETY) isn't known as an Internet player and certainly doesn't have the "dot com" valuation, but that could be changing courtesy of growing e-commerce revenue and a string of "dot com"-like acquisitions.

Getty (financials), which provides digital and analog images, has been working feverishly to get on the business-to-business e-commerce map. Shares (chart) hover around $24, giving it a market value of $863 million.

Getty Images: Undervalued?

But Getty Images Chief Executive Jonathan Klein is confident Wall Street will notice. In the last seven months, he has moved the company's headquarters from London to the hipper Seattle. He has also gone on a spending spree, buying Art.com, EyeWire, Digital Press Agency-Online USA and Kodak's Image Bank.

Now Getty is sitting on top of 60 million images and more than 30,000 hours of film footage waiting to be delivered digitally. "We see our entire business on the Web in three years," Klein said.

In the company's second quarter, about 43 percent of Getty's $55 million in sales were delivered digitally via CDs or the Web. E-commerce sales represent about 25 percent of Getty's sales and have grown as a percentage of revenue in recent quarters.

Despite those quick results, few analysts on Wall Street pay attention to Getty, which went public in 1996 and didn't mention "Web" or Internet in its prospectus. Now, Getty wants to be a brick-and-mortar online success story such as Charles Schwab & Co.

But more observers of the digital image market know about Corbis, the Bill Gates-funded image archive. Because of buzz surrounding Corbis, which trails Getty's revenue by a wide margin, Getty is viewed as the other half of a family fortune battle. Getty, chaired by Mark Getty, heir to the Getty oil fortune, is battling Gates and his Microsoft money for a digital image legacy.

"The media likes the Getty vs. Gates story, but we've quietly become one of the top 60 e-commerce sites," said Klein, who maintains that Getty is business-oriented and Corbis is consumer-oriented. Internet analyst Keith Benjamin, at BancBoston Robertson Stephens, has noticed Getty's progress. Benjamin, who typically sticks with the Lycos and Yahoo's as stock picks, rates Getty a "buy."

"We believe the company can accomplish more than 20 percent revenue and earnings growth long-term by capitalizing on industry growth, consolidation, and a shift from analog to digital delivery," Benjamin said in a recent report. Benjamin is projecting Getty (estimates) to have $227 million in sales in 1999 and $360 million in 2000.

Klein said he's comfortable with analysts' estimates. The next stop for Getty is to integrate its recent acquisitions and launch four portals focusing on the creative professionals, editorial and press, small business and home office and the consumer markets.

And all the effort is likely to get noticed on Wall Street. To pay for its Image Bank acquisition, the company will offer 5 million shares, the company said in regulatory filings. Morgan Stanley Dean Witter, BancBoston Robertson Stephens, Deutsche Banc Alex. Brown, Hambrecht & Quist and Pacific Crest Securities will be underwriters. On Wall Street, where there are underwriting fees, there's typically analyst coverage.