Expensive new customers
Putting a few pieces together from the press release:
PlanetAll has 1.5 million members, and thousands of new members are joining each day to use the secure, free service to organize and automatically update information about friends, business associates, relatives, and alumni.
Amazon.com will issue approximately 800,000 shares and assume all outstanding options in connection with the acquisition of PlanetAll and anticipates accounting for this transaction as a pooling of interests.
Let's say Planetall is at 2M "customers" (free-loaders? :)) by year end. that's 0.8M * $117, or $94M. At present prices, that's $47 per (non-paying) customer. Is that high/low? It depends on how much is received in book sales from this newly acquired channel. This boils down to how many members of planetall are not already AMZN customers, and how many then decide to buy books/CD's from AMZN.
I'm sure from a cash point of view, this will be another one of those goodwill (lots of goodwill) acquisitions whose real cost will be overlooked by the analysts, however shareholders should consider whether this acquisition is a good use of their investment money.
From the planetall.com web page,
Background
PlanetAll was launched in November, 1996 and now has over 1.4 million
users. ÿWe have about 40 employees and are based in Cambridge,
Massachusetts.
(expensive employees: $2mil per. They better be productive. :)) |
