Let me get this straight. Credit Suisse / First Boston takes Onvia out and issues a "strong buy" rating. This is a shock to whom? If I am taking someone out, I want to tell the world to buy it. Yes, my actions may be different, but this is business.
Earnings were released and there seems to be some discussion over the content. One camp says it was bad because Onvia did not spend $6mm on advertising and that brought the loss in lower. This camp also points to the Gross Margin situation (as in negative).
The other camp says earnings were good, since the loss was not as bad. They also point to dollar volume of sales and number of transactions.
Now a discussion has started again about competitors - without reference to the now infamous "we have no competitors" comment. Onvia is not unique to this space, just look at Staples, Office Depot, Office.com, etc.
It causes me great concern to see the following:
1) Whether perceived or real, the suggestion that Fisrt Boston is selling is not good. 2) That there appears to be little support for the model - atleast right now. Reasons are decent earnings and the stock has not responded. 3) The overall B2B space is the whipping boy right now. All stocks in this sector are down and there are others sitting on the sidelines waiting to get in.
Either way, either view you have this will be a very intersting ride. I wonder if anyone out there is looking at Onvia as a purchase target?
I think the biggest challenge for the market right now is figuring out who they are and what they do.
It was fairly clear what their focus was with the original model of selling products and services targeted to small business. It might even make sense to add some small business news. The addition of RFQ though, flies right in the face of there own products strategy, with Onvia competing directly with their own customers. The Auctions do the same thing and dilutes the impact of other parts of the business.
From my point of view, it looks like Onvia is trying to do too many things, without doing anything really really well.
The "No Competitors" statement, reiterated again the other day, is just like Wal-Mart saying K-Mart is not a competitor because "we have McDonalds in our stores". Mr. Ballman should openly reference his competitors and show the market that he knows who they are. According to their advertsing they think they compete with the yellow pages.
MY ADVICE: Get Focused. Do what you said you would do: "provide products and services for small business". Be the best at that and show how you can make money doing it, and investors will come back. It can be done - just look at CDWC.
If ONVI had no competitors, as its 20something CEO repeatedly asserts, then why are they selling at a negative gross margins? That statement is ignorant and reckless at best, and disingenuous at worst.
If you have no competitors, then there is no downward pressure on your pricing for goods and services -- your gross margins should not just be positive, they should be whopping, like ATT long distance rates before the breakup, or like MSFT on its Office suite software.
A honest statement would be that "Onvia is the only company on the Internet that has adopted their complete set of strategies as a business model."
To say over and over again that they have no competitors is absurd: are they trying to fool investors or are they now just fooling themselves?