What do you think of Amazon.com’s new zSHOPS?
Reply: Yet again, Amazon.com (AMZN) is leveraging its awesome customer base of 12 million. Investors certainly like the zSHOPS concept. And I think they’re right.
It is no secret that Amazon.com wants to sell virtually everything to everybody; but, of course, this is impossible. Right? Well, by using the zSHOPS concept, Amazon.com can. That is, with zSHOPS, just about any merchant can sell wares using the Amazon.com platform.
And the price is right for merchants: only $9.99 a month and a commission on sales, anywhere from 1.25 percent to 5 percent.
zSHOPS will be integrated throughout Amazon.com. For example, if a customer searches for a book on antique lamps, there will be links to merchants selling those types of items.
zSHOPS means that Amazon.com does not hold any physical inventory, which should translate into higher gross profit margins.
Of course, Amazon.com had impeccable timing, by announcing zSHOPS right before the Christmas season, which for Amazon.com, should be very good indeed.
IPO Rocketing to Jupiter?
What’s your opinion of the upcoming Jupiter Communications IPO?
Reply: This company has been a great help for me, as well as many others in the Net business. Jupiter Communications is a leading market research firm that targets the Net industry. With the Net growing so fast, it is critical to get solid analysis. And this is what Jupiter has done very well.
Here are the valuation metrics on the IPO (assuming the IPO is priced at the top of its price range):
Jupiter Communications | JPTR |
pro forma IPO | |
Shares offered | 3.10 |
Price target/actual | $17.00 |
Proceeds | $52.70 |
Shares out | 16.6 |
IPO market cap | $282.20 |
less working cap | $40.00 |
plus LTD | 0 |
Enterprise value | $242.20 |
1999 Revenues | $14.40 |
1999 Losses | $0.13 |
Annualized rev. | $28.80 |
Jupiter Communications | |
Revenue multiple | 10 |
Rev. multiple enterprise | 8 |
The company sells so-called SPS (Strategic Planning Services) reports. In 1997, the company had 145 SPS clients. Now the company has 654. The company also has other product lines, such as the Mindshare Senior Executive Program, as well as book-length research reports.
In fact, the company must be following its own advice; that is, Jupiter has been growing revenues rapidly. In 1999, revenues were $14.4 million, which compared to $5.9 million in the same period a year ago. As for profits: the company is at near break-even, with a small $130,000 loss.
I expect the IPO to do quite well.
Road Shows: Not All Investors Are Created Equal
What is the “road show”? Also, I heard individual investors are not allowed.
Reply: A road show is part of just about every IPO. It happens several weeks before a company has its IPO and is a way to drum-up interest from institutional investors. Typically, a company’s management will travel to the main financial centers — such as New York, Los Angeles, Chicago and so on — and do presentations. It can be a grueling process.
However, individual investors are not allowed to attend. Nor, are they allowed to even watch a road show.
The rationale? Well, the SEC does not want companies to hype their companies. However, in a road show, management has more leeway. But the SEC does not want to give individual investors access — since they are apparently “less sophisticated.”
I think this definitely wrong. All investors should have access to pertinent information — and the road show can be a great source.
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