E-Mailbag Monday: Ashford.com, iPrint.com, Earnouts
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What do you think of the iPrint.com IPO?
Reply: I think iPrint.com might be one of the week's best performing IPOs. The traditional printing industry is fragmented and has a myriad of inefficiencies. The Web can be a solution. A leading player in the space is iPrint.com.
From the iPrint.com site, you can do just about any type of print job: business cards, letterhead, and even books. The traditonal U.S. print business was about $292 billion in 1998.
However, there is lots of competition. There is even pressure from major office retailers, like Staples.com. Of course, Kinko's stands as a big obstacle.
The lead underwriter is CS First Boston and the proposed ticker symbol is IPRT. The price range is $8.00 to $10.00.
Still Some Sparkle
You wrote about Ashford.com some time ago. The stock has fallen lately. What's your view still?
Reply: In only a few months, the e-tailing sector has been hit by a freight train. No one has been spared -- including, of course, Ashford.com (ASFD) . However, I think Ashford.com remains a unique online retailer. It is the only public company in the luxury goods market. Moreover, the luxury goods market tends to have high margins, less discounting and lots of fragmentation. So far, Ashford.com has been rapidly extending its dominance in this emerging online industry.
Actually, in the past week, the stock price has been perking-up. Part of this was due to an important announcement. The company has entered the business market with its launch of its corporate gift site. There are 50 customer accounts -- with more to come. The corporate site has 30 new brands, like Kosta Boda, Orrefors and Wilton Armetale. You can even buy gifts based on different themes and events (for example, one event is labeled "IPO").
The new site is built to make corporate giving easy, as a company can customize and manage annual gift-giving plans. The technology also accounts for the subtleties of etiquette of various industries and cultures.
What is an earnout?
Reply: When buying a company, part of the purchase price may be in the form of an earnout. That is, if the target company meets or exceeds certain goals (like sales targets), then the acquiring company will pay more for the acquisition. This accomplishes a variety of goals, such as retaining current management, as well as providing incentives to encourage the target company to perform better.
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