Nstein lands a big'un

Today, Nstein (EIN.V) announced that Hearst Newspapers has contracted the Nstein platform for its entire content supply chain - representing 16 newspapers. This is Nstein's largest single deal - probably worth over $1.5 million in licensing alone. Services could be valued at twice that.

During 2009, Hearst Newspapers could represent more than 10% of revenue streams to Nstein. In the meantime, it is my understanding that the Company could recognize revenue from licensing during Q4, 2008. This would mean that there is a greater than 50% chance that the Company could exceed my expectations for Q4 in terms of sales and profitability.

More importantly, this transaction reduced balance sheet risk. The Company likely has sufficient funds to be able to survive the current downturn in the markets. However, I think that it would be an excellent time for the Company to more aggressively look to offering some SaaS licensing options to its client base. Although revenue ramp may not be as fast, NStein would not lose many clients to "stand-pat" decisions used to preserve weakened balance sheets. A subscription or user-based licensing solution would probably entice reticent prospects to more aggressively adopt Nstein's content management solutions during 2009. The cost/benefit equation tips dramatically towards deriving more revenue when capital is preserved.

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