Network Engines, Inc. (NasdaqNM: NENG) soared 76% on Friday to close at 4 3/16. We have had NENG at the top of our Watch List for the past couple of weeks. We believe that NENG may be another NTAP some day down the road. Stockprowler will likely do a report on NENG in the very near future. 

Stockprowler’s pick this week is…

Razorfish, Inc. (NasdaqNM: RAZF)

Corporate Web Site: http://www.razorfish.com/

Shares Outstanding: 98.3 million

Public Float: 60.9 million

Insider Ownership: 38%

Institutional Ownership: (179) 22%

Market Capitalization: $159.7 million

Closing Price Friday: $1.625

     New York City based Razorfish, Inc. is a leading provider of global digital solutions. Digital solutions are business solutions that use digital technologies to enhance communications and commerce between businesses and their customers, suppliers, employees, and other partners. Razorfish provides an integrated, end-to-end solution and is involved with every aspect of a solution from strategic consulting to design of information architectures and user-interfaces to integration of backend enterprise resource planning and legacy systems. These digital solutions utilize a wide variety of platforms, including the World Wide Web, wireless, broadband and satellite communications and a variety of digital devices and information appliances, including desktop PCs, mobile phones, pagers and personal digital assistants.

     The company has created digital solutions for its clients in a variety of markets: financial services, media and entertainment, healthcare, higher education, information and telecommunications, travel and leisure, retail, and manufacturing. The list is lengthy and consists of many high profile clients including numerous Fortune 500 companies. Razorfish recently teamed with Ford Motor Company to strengthen Ford’s online identity. On December 20, 2000 the both companies announced the completion of the first in a series of projects concerning Ford's digital strategy - the relaunch of a fully transformed and integrated website, www.ford.com.

Razorfish provided in-depth strategy and intuitive design, while the Ford-Trilogy joint venture implemented transformational technology to Ford's existing corporate website in an effort to produce a more user-friendly and consumer focused experience. “The completion of this project marks the first milestone in a long-term relationship between Razorfish and Ford,” said Brian Kelley, vice president, Ford Motor Company. “Together, we were able to reach our goal - to link the online components of all Ford Motor Company's product and service brands. The collaborative effort enables Ford Motor Company to take a leap forward in the digital medium and strengthen our online identity.”

     On December 19, Razorfish, Inc. announced that it has been selected to collaborate with the Coca-Cola Company to develop the company's marketing website in the Nordic countries. “We chose to collaborate with Razorfish because of their creative vision and expertise in the area of strategy and technology,” said Catharina Stackelberg, country manager of Coca-Cola, Finland. “By deploying web and mobile technologies, we will work together to integrate service offerings that will fully accommodate our consumers’ needs.”…Razorfish is a global digital solutions provider with offices in Amsterdam, Boston, Frankfurt, Hamburg, Helsinki, Los Angeles, London, Milan, Munich, New York, Oslo, San Francisco, Silicon Valley, Stockholm, and Tokyo.

     For the nine months ended September 30, 2000, company revenues rose 85% to $217.8 million. Net income rose 8% to $9.2 million. On December 12, 2000 Razorfish warned that revenues for the fourth quarter ended December 31, 2000 will be approximately $50 million… well under expectations. As a result of this revised outlook, the company expects a pro forma net loss per share (before amortization of intangibles and a restructuring charge) between ($0.17) and ($0.22) for the quarter ended December 31, 2000. Wall Street, on the other hand, had predicted the company would post a per-share profit of 2 cents.

     A slew of earnings warnings over the past few weeks has highlighted the trouble that most Internet consultants are now facing as a result of the bursting Internet bubble. Many cash strapped dot-com companies now find themselves in the position of having to cut back on purchasing consulting services while others are closing their doors, unable to pay for services they contracted. Though Wall Street is giving the thumbs down to the Internet consulting industry as a whole, analysts say companies that can switch their client base from dot-coms to old economy companies have the best chance for survival. Analysts say players such as Sapient, MarchFirst, Razorfish and Scient appear to have the best chance at success, and Razorfish has always held a larger percentage of Fortune 500 clients and less than 10 percent of dot-com start-ups in its client portfolio. Analysts say both Scient and Razorfish shifted their client focus early on and are likely best positioned to do well over the long term. According to Forrester Research, a Cambridge, Massachusetts Internet research company, the domestic market for Internet consulting services is expected to grow to $64.8 billion by 2003 up from $19.6 billion this year. Gartner Dataquest forecasts the worldwide market for e-business services to hit $158 billion by 2004.

     Shares of Razorfish have been pummeled and the stock is down nearly 97% from a high of $57 this past year. Current analyst estimates are projecting a RAZF long-term yearly earnings growth rate of between 25 – 50 percent. RAZF closed Friday at 1 5/8 on volume of 3,186,700 shares.  Razorfish has virtually no debt and $84 million in cash… book value is around $3.30. It is the opinion of Stockprowler.com that RAZF is a very attractive speculation at these levels… and that with an upturn in the market likely this month, shares of RAZF will trade considerably higher.