Tuttle: Why Constant Contact looks clunky

by Covestor Ltd.
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Constant Contact
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Submitted by Covestor Ltd. as part of our contributors program.

Author: Kris Tuttle

Covestor model: Soundview Technology

Disclosure: None

We know the insides and outs of email mar­ket­ing and even online social net­work­ing. But have always failed to grasp Con­stant Con­tact (CTCT).

Our takeaway after meeting with management is that the company provides lots of hand-holding for one and two-person companies that do not have any technology skills.

That’s hardly an excit­ing investment.

We first talked about the stock as a short back in Octo­ber of 2007 at $24 and pub­lished a fuller note on the com­pany with a $14 intrinsic value esti­mate in Feb­ru­ary of 2008.

Most of the negative thesis of that research report remains true.

But acqui­si­tions, espe­cially the recent pur­chase of Sin­gle­Plat­form, have now blurred the pic­ture even more.

We’ve uploaded the report and here is the link (PDF): Con­stant Con­tact CTCT Update Feb­ru­ary 2008

Spend­ing $100 million for SinglePlatform, an also-ran in the online restau­rant menu and pro­mo­tion space, is not good. The num­ber of employ­ees is rather small and only about $5 million has been invested in the com­pany.

That’s one hell of a premium.

If Constant Contact  had acquired this com­pany for $15-20 million, I think we would all give man­age­ment the ben­e­fit of the doubt and at least give them credit for being a dis­ci­plined buyer.

But that’s not the case here.We also note that there are larger and more suc­cess­ful pri­vate com­pa­nies like yext.com in this space.

Not every­one out there fol­lows our Twit­ter stream so you may have missed a quote we took from an online forum on email mar­ket­ing where experts expressed the fact that,“you prob­a­bly won’t go wrong in choos­ing any lead­ing plat­form from Mailchimp to Awe­ber as long as you don’t end up with Con­stant Contact.”

Constant Contact is not out to impress any­one who is tech­ni­cally savvy.

But in this world of “con­sumer dri­ven IT”, that strat­egy is not work­ing.

Con­sumers and their gen­er­ally avail­able tech­nolo­gies just keep get­ting better. And Constant Contact keeps look­ing clunkier.

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