So this is worth $220 million in cash to Compaq:
For the nine months ended 10/31/98, net sales totalled $4 million, up from $377 thousand. Net loss totalled $18.9 million, up from $2.4 million.
That's shopping.com. One would presume that Compaq sees something we all don't see. Makes me wonder if Compaq wasn't just paying that much for the web address. If altavista.com is worth $3 million to Compaq, well then one has to wonder how much of the valuation of the internet companies is simply web address.
This becomes even more absurd the more I think about it. Compaq values shopping.com at $220 million, but the fact Compaq is buying shopping.com makes Compaq worth $5.1 billion more in the stock market. Absurdity. But Compaq can't be that bright. By simply announcing this, Compaq becomes an internet stock. And internet stocks are worth at least $400/share no matter the shares outstanding. In Compaq's case, that makes it an additional $550 billion or so. Compaq should've bought with stock.
Meanwhile, I'm clinging to that Amazon.com short. I will be right someday (FLW). And I'm buying Callaway Golf and Brazil (UBB, TCP). Callaway Golf may be having a rough time, but it's a premier name in a growing industry, with no debt, low ratios (P/B 1.4, P/S 1.0), and tons of insider buying at prices higher than this. It's not going bankrupt, and at this price even its dividend becomes competitive. And there's tremendous support in the 9-10 area. TCP - the cellular co for Brazil's most populated area - was highlighted in Barron's this week as being 4X cash flow for a 35% grower. Well, ok, but I know the private market paid a price about 50% higher than the current price back during the privatization, so I figure on that simple measure it is at least 33% undervalued. And then you have the fact that the Brazilian market is undergoing such a crisis that liquidity has dried up completely on the local exchanges. People are sick of Brazilian stocks to the point of avoiding the exchanges altogether. And TCP has repeated bounced off a low just below the current price. Hard to see how this can go wrong if one holds for a few years, though I suspect it will jump on any hint of recovery. I started a small position hoping to see it get cheaper.
Irony of ironies, Amazon.com just sent me a high-quality T-shirt with Amazon.com and a neat logo for being such a good Associate.
Good investing,
Mike |
