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Technology Stocks : Softbank Group Corp

SFTBY 76.93

-5.1%

Nov 5 3:59 PM EST

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To: Edwin S. Fujinaka who wrote (3754)	2/9/2000 6:53:00 PM
From: Edwin S. Fujinaka	Read Replies (2) of 6018

Softbank closed at $1200 unchanged on the US market today. Their 30% owned IPO of Buy.com (BUYX) closed at 27 1/2 up 2 3/8 from yesterday and up 111% from it's IPO price yesterday. That's only a modest rise for an internet ipo, but considering the gloomy forcasts for these B2C retailers, it's not too bad. It came out at 3X revenues and must now be 6 or 7 times revenues. Pretty modest pricing on that basis (for an internet stock). I was not as pessimistic as Harmon and some others: "Harmon: Looking at Buy.com, Organic Inc. (Published on Feb 8 in the morning) by Steve Harmon CNBC.com Contributor Heads up that Buy.com priced its IPO for 14 million shares at $13 each. That puts a $1.6 billion initial market cap on this e-tailer, three times sales. Seems low on the multiple until you consider that Buy.com ought to be called ?EtailIsTheMostCompetitiveSpaceOnTheNetWithThinMargins.com.? (Note: Buy.com opened for trading at 30 1/8 at mid-morning on Tuesday.) Buy.com?s IPO Is Expected to Soar Buy.com?s model was to attract buyers by selling below cost and hoping to make it up on ad sales. It found out that didn?t fly as a business and changed that now by pricing things higher. The biggest risk for e-tail is branding or lack of it. Most shoppers have heard of Amazon.com {AMZN} but few have heard of Buy.com. Amazon.com lifetime performance chart Buy.com?s $128 million loss echoes of Amazon?s great loss story that continues. For not only is e-tail thin margin, it?s expensive to build a brand in on top of that. Two double hits on bottom line potential. Buy.com lacks the brand chutzpah of an Amazon. As ValueAmerica {VUSA} found out let the buyer beware." * * * * * * My personal take on this situation for Buy.com is that they are primarily in the electronics and computer business as compared to AMZN in books and CDs. I think that in the long run, the electronics and computer products will prove to be the most profitable because of Sales tax and shipping considerations as well as overhead costs compared to the bricks and mortar retailers. Amazon is getting the press, but Buy.com will eventually make a profit. Time's man of the year, Bezos of Amazon, will not produce better long term profitability than Buy.com in my opinion.

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