Not exactly a ringing endorsement of the new (16-month old) management at EBAY. This story demonstrates a real fear of those of us involved in start-ups. Almost all of the value of EBAY was established before the new management came in. Yet, the control of its future is now entrusted to the newcomers. This if often necessary, since entrepeneurs often make bad managers. However, as an executive with two high tech IPO-candidate companies, getting a new venture going with one philosophy � and then operating it with another, contradictory philosophy is a real concern. Time will tell if these were good moves in '98 and '99, but they don't seem to be getting a rave review here.
Here's a stock that is prime for profit. It's also a much better play than EBAY:
mPhase Technologies Inc (XDSL). announced today that Investec Ernst & Company, a New York based broker-dealer, has initiated coverage of their company.
Investec Ernst & Company technology analyst John J. Garrity initiated coverage of mPhase Technologies, Inc. citing the following:
``mPhase Technologies, Inc. is a communications equipment company whose products facilitate the convergence of Video, Voice, and Data services over the existing copper telephone wires through a dedicated bandwidth solution. Using its proprietary hardware, mPhase offers a specific type of DSL called Rate Adaptive Digital Subscriber Line (RADSL), allowing high-speed data transmission at speeds up to 6Mbps downstream and up to 1Mbps upstream, increasing throughput up to 200 times faster than an existing 28.8 Kpbs internet connection. mPhase's DSL technology is unique in that it enables simultaneous delivery of high-speed Internet access, digital video, and telephone communications over an existing telephone line on an unshared platform. Potential applications made possible by mPhase's products include video teleconferencing, remote education, tele-medicine, and e-commerce.''
``Given mPhase's development stage status, an earnings model is inappropriate. The company is a pure technology play and can not be valued using traditional methods. As an alternative, we looked at the public market valuations of stand alone DSL companies. Comparable publicly traded providers of DSL technology have an average market capitalization of $206 million. Therefore, if mPhase were to be valued on a comparable basis, it would sell for $11,''
(This stock has been hit HARD by the recent inflationary news and is currently trading at an anemic $6 1/4. Get on board...the boat is about to leave the dock. Buy a $1,000 worth and be glad you did by summer's end.)
Amazon's auction site is only 11 weeks old and has already reached the level of listing and bidding activity which it took eBay two years to achieve.
eBay's current market cap presumes astronomical growth rates. To quote Fortune: "Richard Zandi, an analyst at Salomon Smith Barney, calculates that by 2009 eBay will have to be selling $212 billion of goods a year to live up to its current value. To put that in perspective, that's almost 60% more than what the world's biggest retailer, Wal-Mart, sold in 1998. "
There isn't enough garage sale and collectibles merchandise traded on the planet to make that happen.
The auction format is a very difficult way to buy something, and only makes sense if you are buying something unique or special. For high volume retail goods, a person wants low prices, quick service and no hassle. Auctions have a role, but it is specialized and does not displace the vast majority of conventional retail buying. Would you wait for days to find out if you did or did not agree to buy a bottle of shampoo or tires for your car.