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I thought I would pass this on. I had a professor at DePaul who is a Partner at USWeb. I have always liked their business. He, obviously, was very strong on the company.

08:40am EST 23-Feb-00 ING Barings (Karen Ficker (212) 409-5590) USWB
USWB: Client Demand For Combined Serv of WHIT and USWB Ahead of Expectations
USWeb/CKS Group, Inc.
(OTC: USWB-27 7/16)~

Client Demand For Combined Services of WHIT and USWB Ahead of Expectations
Karen Ficker (212)
Frank Connelly (212)
February 23, 2000

52-Week Range: 59-17 EARNINGS PER SHARE
Daily Vol(000s): 2543 1998 1999 2000E 2001E
Shares O/S(mil): 104.6 Mar $0.03A $0.08A $0.18 NA
Market Cap(mil): $2,870 Jun ($0.08)A $0.12A $0.19 NA
Avg. ROE 2000E: NA Sep ($0.14)A $0.15A $0.22 NA
EPS Growth: 60% Dec $0.32A $0.16A $0.23 NA
Debt/Capital: NM Year $0.18 $0.52A $0.82 $1.29
Book Value/Share: $4.28 P/E NM NM 33.5 x 21.3 x
Dividend/Yield: $0.00/0.0%
Insider Holdings: 12% Note: Numbers may not add because of
S & P 500: 1352.17

On Friday (2/18), the managements of USWeb and Whittman-Hart (OTC: WHIT—
5/16) gave guidance and released pro forma historical numbers for the combined entity. Highlights from Friday's conference call include the following:
WHIT and USWB are finally able to pitch new business together and the response has been even more favorable than expected.
Project sizes for the combined firm are tracking way ahead of expectations
when the merger was announced 10 weeks ago the two management's had told investors they expected new business wins in the $10-$15 million range and are now seeing a range of $10 - $30 million. WHIT CEO Bob Bernard said he thought that project sizes in the $100 million range would be likely for 2001E.
No changes in employee turnover trends—turnover so far in Q1'00 has been consistent with the last two quarters. Recruiting has been strong in Q1'00. The two firms combined have had over 400 net headcount additions so far in Q1.
Topline guidance is still 40%, off of a base of $992 million pro forma for
1999, or roughly $1.4 billion in 2000 and $1.9 billion in 2001. The
company will begin the year with $400 million in cash
As expected, there will be one-time costs of $50-60 million for rebranding and integration expenses, some of which will hit in Q1 with the bulk coming in Q2 and Q3. The combined firm will hold an Internet Summit in New York on March 23rd, where it will launch its new name and brand.
We view USWeb as the industry leader with unmatched breadth and depth of expertise—and with the industry's current emphasis on time to value, size is everything. We reiterate our strong-buy rating on shares of USWeb and underscore that we like this company on its own merits. We maintain a $56 price target offering 104% appreciation from current levels independent of a merger.
We believe that the stock has been negatively impacted by perceived integration risk. While we admit that there is always integration risk when you have a merger, we think that the market has over compensated in this case and we believe this has created an opportunity for investors.
We would also remind investors that USWeb has a successful track record of making and integrating acquisitions, and that, in light of the fact that the two firms have already outlined and initiated a detailed integration plan, we are confident that the combining of USWB and WHIT should proceed smoothly, resulting in a category killer for the Internet Professional Services industry.
Shares of USWeb are currently trading at 3.4x 2000E revenues, well below the peer group average of 12.3x.
Independent of a Whittman-Hart merger, our target price for USWeb is $56, which offers 104% potential price appreciation from current levels, and implies that shares of USWeb trade at roughly 5x 2000E revenues and at only 43x times our 2001 cash EPS estimate of $1.29, conservative in light of the company's projected 60%-plus growth rate.
We believe that investors should be aggressively buying shares of USWeb, taking advantage of the current price weakness. Should the shares continue to hover at levels significantly below our price target, we would not be surprised if an outside suitor emerged, as this deal is still subject to a shareholder vote, and given that competitor firms have expressed interest in USWeb in the past.
Additional information available upon request. Stocks priced as of previous session's close.
ING Baring LLC makes a market in this security.
First Call Corporation, a Thomson Financial company.
All rights reserved. 888.558.2500
-> End of Note <-
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