QXL ricardo Slumps on September Figures
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[London, ENGLAND] European auctioneer QXL ricardo plc saw its shares dive Thursday after it announced deepening losses and the need to raise 30 million pounds (US $43 million) to avoid a cash drought in 2001.
QXL's quarterly figures to the end of September 2000 showed a loss of US $96.8 million, a six-fold increase over its second quarter losses. The company pointed to its write-off of goodwill in its takeover of Swedish auctioneer Bidlet as a major reason for the loss.
With shares plunging 20 percent in morning trading, QXL is now a shadow of its former self, having lost 98 percent of its value since March.
Nonetheless, Chief Executive Jim Rose seemed almost bullish in talking about the business continuing to experience solid growth, with an increased focus on multi-device access through the PC, mobile telephony and television and several significant corporate acquisitions.
Investors listening to the chief executive and then reading the figures could be forgiven for thinking each referred to a different company altogether.
"We are now achieving strong synergies through a number of initiatives including rationalizing corporate overheads, realizing efficiencies from the migration of Bidlet and ricardo to our agency-based model and to a single technology platform," said Rose.
He went on to say that proforma operating expenses have decreased significantly quarter on quarter and he expects to see additional reductions in future quarters.
However, without liquidity, even the most energetic and acquisitive company will falter eventually. To raise the additional money needed to "see it through to profitability" QXL has agreed to sell bonds and shares to investors.
The pace of acquisition has been frenetic at QXL in the past few months. The company took a further 50.2 percent of the issued share capital of Bidlet in September, and increased its stake in ibidlive NV from 50 percent to 62 percent in October.
In November, QXL issued and listed over 126 million shares on the London Stock Exchange as a result of its acquisition of pan-European online auction community ricardo.de AG, with 141 million more shares to come.
Trading in QXL shares will also take place on the Frankfurt Stock Exchange in the week commencing December 4, a date which is a week later than previously announced.
QXL pointed to recent developments to show that its business was sound, despite its complex finances. Among the business developments are its strategic alliance with travel agent Thomas Cook, its travel agreements with British Midland and Virgin Holidays, its agreement with ntl to bring online auctions to all ntl platforms, and its announcement of QXL.tv.
Against these must be set its relatively modest turnover of US $8.52 million for the quarter ended June 30, 2000, and its deepening losses.