Motley Fool talks about Interland

Another Interland (INLD) post. This is getting boring, but we thought we would post our thoughts on today´s Motley Fool article on Interland. The reason? If the Motley Fool is following Interland and they get positive on the stock, you can be sure the stock will go up alot. It did from one of my best picks in the last several years, Natus Medical (BABY).

Aside from the great symbol and a return to profitability, I don´t have much of a clue as to why BABY has gone up so much. The stock is clearly very overvalued and I have sold a bunch. But the Motley Fool still pushes BABY, so I think their followers have latched onto it and the same can happen with Interland (INLD), if the Motley Fool gets positive here.

Below is an excerpt with commentary:

"The problem is: Why go with Interland when you can go with Google or Yahoo? They have more distribution and offer greater power and flexibility (as well as competitive prices). As I indicated in a piece I wrote last year, the best bet for Interland is to sell its business to a bigger player. The company's recent restructuring activities may be the precursor for just such an action. "

The flaw in this analysis is that nobody needs to go with Interland. They already have 137,000 customers. All Interland needs to do is upsell services to their existing customer base and minimize churn. Also, most businesses need help implementing Google AdWords and other Internet advertising/marketing programs. They do not have the expertise to do this in-house. Even though, many do opt to go to Google directly, I think many lose tons of money and then look for help from experts. Google´s advertising programs are not as simple as they seem and many businesses are getting hurt financially (I know this first-hand) by taking a simplistic attitude towards Google AdWords and Overture (now Yahoo!). Interland has alot of potential business, should it persuade its customers to seek a bit of help for their online marketing and advertising campaigns.

Finally, I doubt very highly that Interland is going to sell their entire business. It´s not a direction that the major shareholders have done in the past with other equity investments. My bet is on a pronounced turnaround by early 2006. The stock will then go to $6 quickly.