(cir) Spoke with Paul Henry (1/25/00)....
Had a list of questions regarding shares, management, current + future deals, strategies, et cetera. Most of my questions were answered as follows: we'll be issuing an announcement about that shortly.
Regarding shares we talked about the OS, full dilution and the authorized and how this relates to parted employees specifically concerning how many options were vested and left to be converted. Henry said, "not many".
Regarding management, we spoke about changes made both to contain costs and to maximize output. We didn't get into the specifics of who is gone and who is new. He did note that the list of management on the web site isn't inclusive.
Regarding current deals, we spoke briefly about LifeTime Learning and how to get better returns from this and other efforts. Henry noted that the LL was distributed to every school K through 12 nationwide by LL. Henry noted that this deal was the only deal that required upfront costs primarily from mailing. He said a number of schools did and are participating with fundraisors. but he also said they are exploring how to both get greater participation with larger fundraisors without having to re-incur costs. He said the full amount of money spent on this deal wouldn't be re-occurring since materials didn't have to be recreated. After a brief discussion on who purchased the most cd's, I suggested that the next mailing be more targeted toward Junior and Senior highs in more affluent areas (where more kids w. greater incomes are online) to save costs and to get greater returns. he said this was already considered. (There isn't much point in sending a mailing to a elementary in a poor rural area that won't purchase many cd's per customer. Targeted marketing is more effected than mass marketing). Thinking aloud, I also suggested that share holders could take a more pro-active involvement in their investment by introducing the schools that they have their children in to the mycard program and mycard.com website.
Regarding both current and future deals, the issue of execution was discussed. Henry said greater emphasis was going to be placed on corporate deals and deals where the fundraisers were more self directed. We spoke briefly about Coca-Cola. He reiterated that Coca Cola paid for the cards. He also wouldn't tell me the exact numbers of card involved or margin per card. When I asked him whether these card sales were going to be in the 4th or 1st quarter, he said, I believe, that these were going to be accounted for in the 4th quarter, but don't quote me on this.
This led to a very brief discussion about how tsig reported their sales. I noted CDnow accounting methods of including the cost of the passed through product in their gross revenues and the backing out of these costs before giving net revenues. I also said it would be nice to get additional info as a share holder about what was being sold, since card sales indicated retained customers. Henry said, as volumes increased, additional info regarding sales would be noted in the SEC filings.
The conversation was guided by my questioning, and probing realizing that much of what I wanted to know, Henry couldn't answer. Henry can't reveal information to me or any other share holder that isn't revealed to all share holders simultaneously. Consequently, our conversation revolved more around the big picture and I, specifically refrained from asking specific questions like when news was coming or what deals were with whom.
Some other fragments of our conversation dealt with 1 to 1 marketing and identifying targets to whom sales and sales effort should be focused. This briefly included colleges, greeks, and other similiar demographics.
Not part of our conversation, but a necessarily aside to understand the emphasis of some of my questions is a quick overview of the difference between 1 to 1 marketing ( aka relationship or permission marketing) and mass marketing. 1 to 1 not only acquires a customer, but identifies (targets) the customers that spend the most. Rather than just getting more customers, the key is to get more from the customers you have. Such a targeted rather than mass approach is more cost effective both in acquiring and retaining customers.
Anyway...'nuff said for now...
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