K-Tel (KTEL) Have the cheesy '70s records come to an end? Message Board

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Technology Stocks : K-Tel (KTEL) Have the cheesy '70s records come to an end?

KTEL 0.272

+0.7%

Nov 14 9:30 AM EST

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To: Louis Riley who wrote (1275)	5/1/1998 10:40:00 AM
From: peter michaelson	Read Replies (3) of 3203

Mr. Riley: Thanks for that link to Yahoo re KTEL, CDNow and N2K. In as much as the KTEL valuation seems to be springing off of the valuations for the latter two companies, my question is this. What is the rationalization for value on CDNW and NTKI of 30x sales? I realize that growth is high currently, but from a very small base. What would one expect an average operating income % to be on the sales base? My primary thought is that the barriers to entry in this area and many other 'net retail' businesses are very, very low. If these companies see good profits, cost of entry is so low that others will enter, including, especially, the Tower Records and Virgins of the world. As distribution, or retail, becomes more efficient due to inexpensive electronic outreach, then retail becomes a commodity, and priced accordingly. Having never read a convincing answer to this question to date, I would greatly appreciate your thoughts. Thank you, Peter Michaelson

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