E-MailBag Monday: Dead IPO Week, eToys, EDI
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What looks good in the IPO market this week?
Reply: The week before Christmas is always slow. This year is no exception. There are a mere three deals planned for this week. What's more, the deals are very small. In fact, the three companies will collectively raise about $80 million (in these crazy IPO days, an $80 million IPO is considered kind of small).
One of the IPOs is in the business-to-business space (B2B) and is called, aptly enough, B2Bstores.com. The company was launched in September 1999 and has zero revenues. The lead underwriter is very small: Gaines Berland. Don't expect a RedHat-style first-day jump with this one.
Toying Around with eToys
Reply: Although there is much competition and Toys R Us is a factor this Christmas, I still think eToys (ETYS) looks like a good short-term play. The high on the stock is $86 and the current stock price is $37-9/16.
All indications are that the company will have a blow-out Christmas. In the latest release, the company announced that it added 900,000 more customers in the fourth quarter. Now the company has more than 1.5 million customers. What's more, the company made the smart move of extending the amount of time a customer can make orders by 24 hours (from December 17 to 18).
However, long-term the company's future has many clouds. Next Christmas, in fact, will likely be the time when the competition will have a significant impact on the company.
B2B and EDI?
What is EDI? I've been hearing about this lately.
Reply: With the boom in B2B commerce, the acronym EDI is hitting the mainstream. EDI stands for Electronic Data Interchange. Essentially, this is a propriety way for companies to make transactions. However, it uses expensive hardware and software and thus has been the primary domain of Fortune 500 companies.
But with B2B ecommerce, the Web can be used as the platform to carry out the transactions. It is much cheaper and more universally available. What's more, B2B is more standardized -- using the so-called XML (extensible mark-up language) protocol.
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