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Blackboard: Head of the Class

06/17/2005 12:00 am EST


Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

"I want to raise our tech exposure, but also want to make sure that our new long positions are in sectors considered safer havens," says Bryan Perry. To do so, he has found "a company that is emerging as a true technology leader in the e-learning space."

"Blackboard (BBBB NASDAQ) is a software company with 12 million end users at more than 2,200 universities and K-12 institutions worldwide. Its Learning System enables education providers to support online teaching and learning environments that can be used to augment a classroom-based program or for distance learning. Its Community System includes functionality for student organizations, faculty, and staff, as well as departmental collaboration, information distribution, and single sign-on access to existing administrative systems. Its Content System research archival, extracurricular, and departmental activities that require the central management, tagging, sharing, and re-use of electronic files.

"The firm posted better-than-expected profits for the first quarter. Blackboard posted a profit of $5.4 million, or 20 cents per share, compared with a year-ago loss of $1.8 million, or 33 cents per share, which included payment of preferred dividends. The results beat internal guidance and Wall Street estimates. Revenue jumped 23% to $30.9 million from $25.2 million last year. Blackboard said demand was particularly strong for its academic suite of applications and its hosting portfolio. It also raised its profit outlook for the year, saying it expects earnings of 78 cents to 81 cents per share, on sales of $132.5 million to $134 million.

"On May 26, the company announced it won the 2005 Codie Award, sponsored by the Software & Information Industry Association (SIIA) for the best post-secondary education learning management solution. Recognized as the leader by SIIA, the Blackboard Learning System is the platform on which millions of teachers and students rely to make education possible at any time and from any location. Teachers can post course materials, grades, and exams online with the Blackboard Learning System. Students can access all of these materials and participate in online discussion boards and chat sessions with professors and/or peers. These are just a few of many features possible with the Blackboard Learning System.

"From a technical standpoint, the stock broke out of a channel at $18.50 and is now trading at $19.60. The 52-week high is $23.40, which was a price the stock hit on its first trading day as an IPO in June of last year. Since that time, it has traded as high as $22.50 and as low as $14. The shares have been under steady accumulation, as evidenced by a very positive money flow going into the stock during the past two months. Now having cleared resistance at $19, the shares should rally up to new highs of $25, which is my price target, for a projected gain of 27%."

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