E-Mailbag Monday: Ashford.com, iPrint.com, Earnouts

What do you think of the iPrint.com IPO?

Reply: I think iPrint.com might be one of the week’s best performing
IPOs. The traditional printing industry is fragmented and has a myriad of
inefficiencies. The Web can be a solution. A leading player in the space is

From the iPrint.com site, you can do just about any type of print job:
business cards, letterhead, and even books. The traditonal U.S. print
business was about $292 billion in 1998.

However, there is lots of competition. There is even pressure from major
office retailers, like Staples.com. Of course, Kinko’s stands as a big

Also, the company has small amounts of revenues. For the first nine months
of 1999, the company had revenues of $1.7 million. Losses were $6.6

The lead underwriter is CS First Boston and the proposed ticker symbol is
IPRT. The price range is $8.00 to $10.00.

Still Some Sparkle

You wrote about Ashford.com some time ago. The stock has fallen lately.
What’s your view still?

Reply: In only a few months, the e-tailing sector has been hit by a
freight train. No one has been spared — including, of course,
Ashford.com (ASFD)
. However, I think Ashford.com remains a unique online retailer. It is
the only public company in the luxury goods market. Moreover, the luxury
goods market tends to have high margins, less discounting and lots of
fragmentation. So far, Ashford.com has been rapidly extending its dominance
in this emerging online industry.

Actually, in the past week, the stock price has been perking-up. Part of
this was due to an important announcement. The company has entered the
business market with its launch of its corporate gift site. There are 50
customer accounts — with more to come. The corporate site has 30 new
brands, like Kosta Boda, Orrefors and Wilton Armetale. You can even buy
gifts based on different themes and events (for example, one event is
labeled “IPO”).

The new site is built to make corporate giving easy, as a company can
customize and manage annual gift-giving plans. The technology also
accounts for the subtleties of etiquette of various industries and


What is an earnout?

Reply: When buying a company, part of the purchase price may be in
the form of an earnout. That is, if the target company meets or exceeds
certain goals (like sales targets), then the acquiring company will pay
more for the acquisition. This accomplishes a variety of goals, such as
retaining current management, as well as providing incentives to encourage
the target company to perform better.

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