E-MailBag Monday: Dead IPO Week, eToys, EDI

What looks good in the IPO market this week?

Reply: The week before Christmas is always slow. This year is no
exception. There are a mere three deals planned for this week. What’s
more, the deals are very small. In fact, the three companies will
collectively raise about $80 million (in these crazy IPO days, an $80
million IPO is considered kind of small).

One of the IPOs is in the business-to-business space (B2B) and is called,
aptly enough, B2Bstores.com. The company was launched in September 1999
and has zero revenues. The lead underwriter is very small: Gaines
Berland. Don’t expect a RedHat-style first-day jump with this one.

Toying Around with eToys

What’s your opinion of eToys?

Reply: Although there is much competition and Toys R Us is a factor
this Christmas, I still think eToys (ETYS)
looks like a good short-term play. The high on the stock is $86 and
the current stock price is $37-9/16.

All indications are that the company will have a blow-out Christmas. In
the latest release, the company announced that it added 900,000 more
customers in the fourth quarter. Now the company has more than 1.5 million
customers. What’s more, the company made the smart move of extending the
amount of time a customer can make orders by 24 hours (from December 17 to
18).

However, long-term the company’s future has many clouds. Next Christmas,
in fact, will likely be the time when the competition will have a
significant impact on the company.

B2B and EDI?

What is EDI? I’ve been hearing about this lately.

Reply: With the boom in B2B commerce, the acronym EDI is hitting
the mainstream. EDI stands for Electronic Data Interchange. Essentially,
this is a propriety way for companies to make transactions. However, it
uses expensive hardware and software and thus has been the primary domain
of Fortune 500 companies.

But with B2B ecommerce, the Web can be used as the platform to carry out
the transactions. It is much cheaper and more universally available.
What’s more, B2B is more standardized — using the so-called XML
(extensible mark-up language) protocol.




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