eToys Inc. (ETYS) Message Board

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Technology Stocks : eToys Inc. (ETYS)

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To: Patriarch who wrote (770)	11/3/1999 6:02:00 AM
From: Harley Davidson	Read Replies (2) of 1330

I think you're right about the Christmas season being critical. I was a bit surprised at how low the sales were for Q3. Considering they had The Baby Center revenues in Q3 and not in Q2. The specialty E-commerce site I would guess would be more attractive to consumers. The mega stores offer the convenience of one stop shopping and the consumer already has that on the net.... all he has to do is sit in front of his computer and he has reduced the geographical distance to the merchandise to zero. So convenience is already provided by the nature of the Internet. I think there is something about the shopping experience that is lost on the Internet. Having the ability to immediately enjoy ones purchase for instance. Window shopping on a warm Saturday afternoon.... etc I think that the market will absorb the recently released shares (actually most will be released Nov. 12). Then all eyes will be focused on the anticipated Q4 earnings release. I bet it runs again and I bet the earnings will disappoint. I think they will loose 40-50 million in Q4. They will have to fund themselves before next Christmas season. It seems to me that a large challenge will be to keep enough merchandise on hand to satisfy the demand without the benefit of any demand history. The toy market being as fickle as it is, ETYS could wind up with a whole lot of obsolete merchandise. Also, I think this company needs to sell about 1 billion in toys to break even. GM is 20%, operating costs are at least 150 million, 20% gives you a 5 times multiple, 5 times 150 million is 750 million. Their expenses will increase to handle the increase in demand and all of a sudden you got to sell a billion dollars worth of toys to keep the lights on. BuddyR (WSS)

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