Reiterates Strong Buy. Raises 4th qtr estimates
from .92 to .96.......projects 4th quarter same store
sales to increase to 8% from 3% and raises price target
from $25 to $30. Also raises FY2000 estimate from
$1.45 to $1.65. Also describes to SPO as successful
raising $51 mil.
A poor choice of words perhaps. I should of said
video games. Don't read too deeply into the phraze.
"Our" was a reference to all stock holders. I also
realize that ELBO is not a manufacturer.
and that is, a spin-off can be a taxable
transaction or a non-taxable one. There are complicated rules
here. In the case of a spin off to shreholders of a
business in existence for a period of time, the
transaction would not be taxble to the party spinning off the
stock i.e. ELBO. The tax effects are important here.
Taxes often kill these transactions. I don't know all
of the particulars in ELBO's instance to opine on
Those wishing to learn more about
the effect of spin-offs may wish to look at DZTK's
board and the commentary regarding their planned
spin-off (tax free in this case) of PSWeb, planned for
Thursday next. There are several good posts on the
In our case, here, I would hope that ELBO
holds its horses for awhile before planning any
spin-off of EB World until such time that it is further
developed and working well. I would also hope that ELBO
grows its traditional business further and perhaps
expands into other business lines to broaden the base
business appeal. I would think that the share price would
be higher at that point as a result of intelligent
expansion. There are many areas both on the domestic and
international front that ELBO may wish to exp1ore before
diluting itself and its share price with an EBWorld
I am hopeful also that the recent
secondary exposed ELBO to more analysts which they
certainly need in order to continue to support the share
price. The fiasco re: ELBO UK is a sore spot which needs
some healing and more importantly reaction from
management here in the US to soothe wounds caused by the
price drop immediately after the secondary.
holiday season should be splendid for longs and the good
news is that we should hear alot about progress from
management on that front in the weeks ahead.
been a strong supporter of ELBO since its public debut
and have been rewarded nicely. However, I truly
believe that the best is yet to come, as this issue
should be a much stronger performer as it gets more
broadly known and matures.
A spin-off seems unlikely as long as EBW.com
maintains robust volume. Profitability should take a back
seat to SKU count. For the near future The E-tail side
of the house need only prevent customers from
That being said: EB World has
a real good shot at being profitable. Heres why:
(as explained by RBL) brick and mortar storage and
distribution networks already exist. Additionally: our product
is small enough to make e-comerace a viable option.
(Ever buy a freezer on line?)
Also, why spin-off
a company that ends up as your competition? Most
cooperations spin off a division to exit a production line.
Example: I held ROK when it spun-off CNXT. ROK exited the
semi-conductor biz to concentrate on its core holdings. CNXT was
in no way competitive to ROK's remaining holdings.
All IMHO, commentary welcome.
According to the Pru report, that is what they
are going to use part of the proceeds of the SPO for.
In addition, Katicia goes on to say that if the
advertising drives sales, there is a good chance that
Ebworld.com will be spun-off as an independent equity some
times next year.
Let me apologize to you and the ELBO board for
misinformation I posted several posts ago. You had asked if
anyone knew who had lowered their Q-4 earnings
projections. I had read the S.S.B. and the Prudential reports
on Multex approximately a day or two after the
conference call and attemped to answer your question from
memory. Obviously, I am getting old and should not rely
on what was once a dependable resourse...(my mind)
or should I say lack of same. For the record, it was
S.S.B and no Prudential that lowered Q-4
expectations...siteing higher that expected earnings in the core
business to be offset by a one time extraordinary expense
from their internet initiative. S.S.B. went on to say
that even with the additional internet expense, they
and addtional shares outstanding, they still expected
ELBO to make their original yearly number. Dah...I
should hope so, given that we are crushing the original
number after three quarter, even with the .06 cent
charge for the I-net subtracted.
You know, it is
interesting to me that the Street hasn't yet picked up on
what is happening here. ELBO is investing $10M in the
growth of their E-commerce website ebworld.com, via a
new (more commerce friendly) website format, they
just finished building a from the ground up, a "state
of the art" internet call center that will enable
them to give top notch customer service, they just
opened a distribution center in order to facilitate
delivery on the orders they recieve and now that they have
all the pieces of the infrastructure in place, they
are rolling out their plan to dominate the internet
video game business by spending on all forms of media
and advertising and the building of strategic
alliances with portals (like the AOL deal) and content
providers (like the IGN and CNET deals) in order to drive
visitors to their site. (How's that for a run on sentence)
Anyway, you would have to be blind not to see this
strategy unfolding. I just wonder when the price per share
will begin to reflect this forward thinking and action
on the part of EB. All this and still projected to
make their number for the full year. Now that's
progressive management at its best. Of course, as usual, all
in my very humble opinion.