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Leading or Bleeding Edge? Cyberian Outpost Stakes IPO Claim

Computer software and hardware e-tailer Cyberian Outpost filed to go public as the latest Web retailer hoping to ring up a sale on Wall Street. The trouble is, rival Egghead.com (NASDAQ:EGGS) trades at under 1x sales according to our analysis, leaving us wondering if Cyberian may be left standing in the cold.

While the exact shares and price have yet to be determined, early documents filed by Cyberian reveal that the company wants to raise a maximum $63.25 million. Let's suppose Cyberian (proposed symbol:COOL) prices at $15 (on a good day), that implies 4.2 million shares needed to be offered.

Cyberian posted $22.7 million sales for the entire year ending February 28, 1998 (double 1997 sales), and net loss of $7.1 million. Before you email the bearded ladies investment club with a hot tip on COOL, consider that rival Egghead.com posted $30.5 million in its latest quarter.

EGGS' market cap looks pale at $150 million, however. Subtract its working capital and Egghead.com's enterprise value is a "startling" $100 million. Said another way, in the ridiculous world of Internet IPOs, if Egghead went public as a garage act it would probably command a $200 million or more value just on the "fresh" factor.

Check out Egghead's numbers for comparison:

What's Cyberian Outpost Worth?

Checkout rival Egghead.com

Egghead.com

NASDAQ:EGGS

Shares outstanding

20.97

Share price June 3

$7.13

Market cap

$149.39

Working capital

$49.72

Long term debt

-

Enterprise value

$99.67

Revenue

Latest Q

$74.51

Losses latest Q

-$35.04

Rev. from Web unit

$30.50

Annualized Web rev.

$122.00

Revenue multiple

Enterprise/Web annualized

0.82x

Market cap/Web annualized

1.22x

) 1998 Mecklermedia, Internet.com

Cyberian offers more than 115,000 items in its Web-based "store." Some 103,000 individual customers in over 140 countries worldwide purchased >from Cyberian Outpost since its inception in 1995.

Of that number, Cyberian says more than 90,000 became customers since March 1, 1997, spending an average of about $250--an amount the company believes to be significantly higher than many other online retailers. However, we think ONSALE (NASDAQ:ONSL), the Web-based auctioneer, may have average sales that exceed that amount and Egghead may be close also. Repeat customers accounted for approximately 48% of Cyberian net sales in fiscal 1998.

Bottom line: If Cyberian can convince investors that its "story" is better than Egghead's it may command the kind of valuation to support its desired capital-raising amount of $63.25 million. At this juncture, though, we are much warmer on Egghead and ONSALE based on valuation, sales, branding, and momentum.



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