| |
John Elway/MVP.com/JWG...HOTTTTTTTTTTTTTT...
Dow Jones Newswires -- December 22, 1999
TALES OF THE TAPE: JW Genesis Is A Super Bowl
Play
By ALLISON BISBEY COLTER
NEW YORK -- JW Genesis Financial Corp. (JWG), a tiny, Boca Raton, Fla., securities
brokerage, is being bid up by investors who see it as a proxy for an online sporting
goods retailer being launched by John Elway, Michael Jordan and Wayne Gretzky.
On Tuesday, the three retired star athletes announced they were joining forces with CBS
Corp. (CBS) and a leading Silicon Valley venture capital firm to launch MVP.com Inc., an
Internet retailer with ambitions to go public next year.
Investors eager to get in ahead of the IPO snapped up shares of JW Genesis, which
originally came up with the idea for a Web portal endorsed by Elway. Bringing in the
other partners diluted JW Genesis' stake in the venture to 5% from about 50%, but the
payoff was unequivocal: the company's shares jumped 23% Tuesday, rising 4 1/4 to 23.
The shares recently were down 1/2, or 2.2%, to 22 1/2.
Michael Flanagan, an independent securities industry analyst based in Fort Washington,
Pa., reckons JW Genesis' core financial services operations are worth about $15 a
share, based on the market valuations of its peer group, and about $18 a share based
on a fundamental analysis of its businesses.
Flanagan says the $6 a share premium investors were paying for JW Genesis' stake in
MVP late Tuesday suggests its 5% interest in the venture is worth around $36 million.
"I just have to think Elway plus Gretzky plus Jordan plus the Internet is worth more than
$600 million, so this could just be a beginning" for JW Genesis shares, the analyst said.
Investors who think the company's investment in MVP is undervalued may not have to
wait too long to realize further gains. MVP is about to receive nationwide exposure with a
formal launch during Super Bowl XXXIV in January.
The star power of the athletes alone guarantees that MVP will be one of the
highest-profile start-ups in Internet retailing. But MVP, which will be based in Chicago,
has also recruited John Costello, a former Sears, Roebuck & Co. (S) executive, to be its
chief executive, and lined up $65 million in venture capital financing from Benchmark
Capital of Menlo Park, Calif., and Freeman Spogli & Co. of Los Angeles.
Freeman Spogli owns a controlling stake in Gaylan's Trading Co., a Midwestern
sporting-goods chain that will provide merchandise and help cement supply
relationships.
To further raise its profile, MVP has agreed to spend $80 million in a four-year marketing
pact with CBS, and an additional $120 million on a 10-year pact with SportsLine.com
Inc. (SPLN), an online sports news service. CBS and Sportsline will take undisclosed
equity stakes in MVP as partial payment for the advertising space and MVP will acquire
SportsLine's online retail operations.
Investors who bet that the association with Elway would pay off big for JW Genesis have
been well rewarded (as has the former Denver Broncos quarterback, who has an option
to buy 7.9% of JW Genesis at $14 a share. He's already looking at a 64% return.)
Douglas Raborn, chief executive of Raborn & Co., a Delray Beach, Fla., money
manager, says he considers JW Genesis shares a kind of call option on MVP.
"This adds a lot of sizzle and upside to JW Genesis, which is only a $100 million
company, but is very profitable with good management," he said.
Raborn, who bought 112,000 shares of JW Genesis last week at an average price of
$18, says he likes the fact that JW Genesis is closely held - the directors and executive
officers as a group own 23.1% of the company and Elway has an option to buy 7.9% -
and that it is sitting on a cash pile of $60 million as the result of the sale of its clearing
business in March.
"When they start the nationwide rollout and people learn of the association of John Elway
with this small, obscure brokerage firm and then the Internet opportunity, it could be a
very exciting investment," the money manager says.
MVP's game plan has changed since JW Genesis originally envisioned an
advice-oriented Web site, with tips about fitness and sports techniques as well as
financial planning. But Chief Executive Marshall T. Leeds says the main idea was to sign
up Elway, who opened the doors to venture capital money as well as other high-powered
athletes. "MVP was just an investment idea for us," the CEO told Dow Jones Newswires.
"The ultimate game plan was to end up exactly where we are."
Leeds, who believes JW Genesis' share price was slightly undervalued before the firm
announced the new partners for MVP, thinks there's still plenty of upside for the
company's stock. "If MVP works out the way we expect, this is only the beginning."
-Allison Bisbey Colter; Dow Jones Newswire; 201-938-5298
email: allison.bisbey-colter@dowjones.com |
|
