Good question, Craig. They have 4 sales channels, Direct sales, Wholesale, Catalog, and Internet. I don't expect Direct sales to be affected by internet sales. I believe that it consists of large volume sales to big organizations, and I just don't see someone who wants 1000 copies of some program bringing up a web site and punching in an order; instead I expect some one-on-one negotiations. As for Wholesale, it is only about $3 million per quarter, and doesn't really matter, though I don't expect it to be affected either.
That leaves catalog sales, which I believe will be affected. 1999 was a rough year because the rise in internet sales was (from $4.5 to about $17) was roughly offset by the fall in catalog sales (from $66.5 million to about $59 million). I expect that catalog sales will continue to fall, probably dropping to $48 million (a drop of about $11 million) or so in 2000, but the rapid rise in internet sales will quickly dwarf this drop. I am looking for about $50 million in internet sales, a rise of about $33 million. I expect that by the end of 2000 internet sales will exceed catalog sales, and I think the crossover will take place in Q3.
As for when we start seeing overall revenue growth, I expect it to begin in Q1 2000. I am looking for Q1 total sales of $63 million, up from 1999 sales of $57 million, with all of the growth coming from internet growth. I am looking for Q1 internet sales of $7.5 million, up from $2 million in 1999. As for Q2, I am looking for flat sales compared to last year's excellent Q2, and then for large increases in Q3 and Q4.
The press releases in 1999 claimed that their growth was "fueled by" the growth of internet sales. In 2000 internet sales will indeed fuel growth.
Carl |
