eMailbag Monday: iVillage, PMV, Bluefly, Bid.com
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First reader up send us this from Paris, France:
"Do you think that community based sites such as iVillage will go public soon? Do you think these stock are a big investment opportunity?"
Reply: iVillage touts itself as the women's network and claims 73 million monthly page views. The company recently closed $32.5 million in financing from venture capitalists and others, as well as picked up a few dollars from Intel.
Anytime a professional investor such as the venture capitalists get involved they want a liquidity event of some sort, an IPO is one such moment. Another could be sale to a larger company.
"Can you elaborate on what some of these valuation guides mean such as private market valuation , user value when evaluating a web site?
Reply: Private market valuation refers to what an asset/Web site could fetch at auction among competing bidders. User value refers to the value of the asset divided by the number of unique monthly users, or what I invented called Internet.com's WEBDEX. Each week WEBDEX shows the value per user for the top 10 Web sites, usually Thursdays. See Archives for examples.
ETRADE & ISDEX?
"I would like a ISDEX mutual fund. Try etrade.com"
Reply: If ETRADE would like to talk we're all ears. More than 223 people have voted to make ISDEX a mutual fund in the three weeks we've had the voting link up. ETRADE, Vanguard, are you listening?
"Bluefly has gone up incredibly in past week from 3-21...could you look at it...huge volume of 5x avg daily volume too..they sell designer clothes on the Net..pacts with aol, lycos, athm..etc"
Reply: To really fulfill its potential we think Bluefly may need capital. Bluefly (NASDAQ:BFLY) just opened its Web site September 9, so the results yet are too soon to tell. For the one-month of operating its apparel store on the Web it reports sales of $6,700 in gross revenues from 96 orders with an average order size of $72.
BFLY blipped across the radar from its previously nowhere status after the news it signed deals with Yahoo, Lycos, @home and others. Bluefly has only 2.7 million shares outstanding and a market cap of $36 million on zero revenues to speak of.
BFLY shares have soared as high as $24.50 and as fallen as low as $1.50 per share the past 52 weeks. While the marketing alliances look impressive at first glance we think Bluefly needs to market itself, and that means spending.
"Steve, I agree with your statement (that) blames Netscape's focus on killing Microsoft for overlooking where the real opportunities lay. In retrospect I believe that Netscape's biggest error was bringing in an Internet outsider to head them up. It made Wall Street happy, but Internet companies need vision and understanding first. Marc Andreessen is not given enough credit. His vision started this wild ride for all of us.
Reply: Sometimes hindsight is 20/20 and sometimes hindsight is realizing that Netscape did the best it could do. Many Internet companies blend experienced management with youthful vigor. The more I think about it the more what Netscape did looks like an incredible feat: took on Microsoft and change the software landscape forever.
I also agree that Andreessen should be given more credit for Netscape's rise. Marc reads this report so your comments won't go unnoticed.
"I believe it's time to unmask the differences between Yahoo and Excite. As it's clear from analysis of sales multiples and growth rate, the two companies are quite similar only Excite is lagging behind at about 83% of last Q sales (44 vs 53) of Yahoo or if you look at it differently - several weeks. On the other hand, Excite seems to have a faster growth rate in revenues.
Now, valuation is VERY different. It's true that Excite is losing money, but a closer look shows that it is due in large part to fixed costs which should be less meaningful when sales soar. So, what is the catch?"
Reply: If you want me to play Zorro, Zorro I'll be: Yahoo has three times as many page views per day than Excite, about 150 million to Excite's 50 million. That inventory represents future sales and earnings growth, each page a revenue-generator from ads, e-tail and commerce. Also, there's always a premium to the number one firm in any arena: Coke vs. Pepsi; Wal-Mart vs. KMart; Microsoft vs. Oracle.
"Steve, what do you think about Bid.com (Toronto:BII.TO)?"
Reply: It's difficult to keep track of Canadian stocks, financials and key info for stocks like these and unfortunately that may hurt its valuation and profile on Wall Street. The auction space is crowded with eBay (NASDAQ:EBAY), Onsale (NASDAQ:ONSL), Egghead.com (NASDAQ:EGGS), and now new IPO uBid (NASDAQ:UBID). I foresee auctions being very common across multiple Web sites, a feature more than anything.
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