Murphy’s Law has been at full-force at
Priceline.com . In the
latest bombshell, the head of the company’s auto services, Maryann Keller,
decided to leave. What’s more, she declared that selling cars online is
doomed for failure. Yesterday, Priceline.com’s stock was whacked $1-1/32 to
$3-1/4. Yep, the 52-week high was $104.25.
Keller was, in fact, the lead auto analyst at ING Barings Now, I suppose
she can return to the comfy high-paying salaries of Wall Street.
Of course, Keller is not the Oracle of Autos. Perhaps the reason for the
failure was the Priceline.com model was not built for the auto industry.
After all, buying a car is a big expense. Do you want uncertainty about the
pricing?
Actually, I think there is a viable business model for online car e-tailers.
However, I think it is key that an online system integrate the existing
network of dealers and manufacturers.
Actually, a Forrester Research study shows that online auto sales are
expected to increase from $400 million in 2000 to $16.6 billion by 2004.
So perhaps there may be some investment opportunities. One that looks
intriguing is
Autobytel . Basically,
through its technology infrastructure, Autobytel.com has a network of over
5,000 dealers – who undergo strict quality requirements and also must
provide competitive, no-haggle pricing.
Autobytel.com has also been able to create a variety of new revenue streams.
For example, there is an auction service (with real-time bidding); pre-owned car sales;
and financing options (leasing, warranties, etc.). There has also been
international expansion, such as in Europe and Japan.
In the past quarter, the company generated revenues of $17.5 million, which
was a 65 percent increase from the same period a year ago. Net losses
were about $6.2 million.
The company has been especially frugal with its expenses. In fact, with its
expanded product mix, profitability is in sight for next year. Currently,
the company has about $90.6 million in the bank and was able to
raise $35.4 million for its European operations. And Autobytel.com’s
current market cap? It’s about $90 million.
