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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium
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To: ciVic who wrote (26138)11/11/1999 8:14:00 AM
From: Kimberly Lee  Read Replies (3) of 108040
 
Briefing doesn't like it: 12:03 ET ****** NextCard Inc. (NXCD) 52 +20 3/8: It doesn't take much to get the slumping stock of a want to be Internet
company going again especially if you attract the eye of the fast crowd. And it certainly helps to announce a
deal that involves Amazon.com (AMZN 73 5/16 +2 1/2), although it recent sessions, this online retailer has
run into its share of selling as investors have been less than enthused about the pile of money the company
seems comfortable spending (and losing) without much regard for its bottom line. Well this morning the
shares of NextCard, a Web-based credit card issuer, are up more than 64% as NXCD has inked a five-year
deal with AMZN that will create a co-branded credit card geared at Amazon's 13 million customer base. In
addition, NextCard will give AMZN a warrant to acquire up to 4.4 million shares of NextCard common
stock. This latter arrangement is really the focal point of the deal and the reason for the jump in the stock as
the company has so far struggled to make its Internet strategy work. Given that NextCard has no real source
of revenue other than its credit card interest and transaction fees, it has tried to develop its Internet strategy
around the instant sign-up feature of its service on the Internet. So far, it has had only limited success as
while individuals may be willing to fill-out a credit card application, it doesn't mean that it will be
approved. Without a quick ramp-up in credit card users from Amazon.com's 13 million customer base,
NextCard could still be fighting an uphill battle as more established credit card companies with more
diversified sources of revenue begin to farm the Internet. If this deal with Amazon.com does not lead to
quick sign-ups and operating results, maybe NextCard's next strategy should be to get AMZN to bite on the
warrant option since the diverse online retailer has so far demonstrated little discipline for spending
shareholder money. Not that this matters to momentum stock players. - RN
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