Morning Report
Thu Jun 04
Leading Or Bleeding Edge?
Cyberian Outpost Stakes IPO Claim
By Steve Harmon
Senior Investment Analyst
Internet.com
"Where Wall Street Meets The Web"
Computer software and hardware etailer Cyberian Outpost filed to go public, the latest Web retailer to hope to
ring up a sale on Wall Street. Trouble is, rival Egghead.com (NASDAQ:EGGS - news) trades at under 1x
sales according to our analysis, leaving us wondering if Cyberian may be left standing in the cold.
While the exact shares and price have yet to be determined, early documents Cyberian filed show Cyberian
wants to raise a maximum $63.25 million. Let's suppose Cyberian (proposed symbol:COOL) prices at $15 (on
a good day) that implies 4.2 million shares needed to be offered.
Cyberian posted $22.7 million sales for the entire year ending February 28, 1998 (double 1997 sales) and net
loss of $7.1 million. Before you email the bearded ladies investment club with a hot tip on COOL then consider
that rival Egghead.com posted $30.5 million in its latest quarter. And yet EGGS' market cap looks pale at $150
million. Subtract its working capital and Egghead.com's enterprise value is a what we dub a "startling" $100
million. Said another way, in the ridiculous world of Internet IPOs, if Egghead went public as a garage act it
would probably command a $200 million or more value just on the "fresh" factor.
Check out Egghead's numbers for comparison:
What's Cyberian Outpost Worth?
Checkout rival Egghead.com
Egghead.com
(NASDAQ:EGGS - news)
Shares outstanding
20.97
Share price June 3
$7.13
Market cap
$149.39
Working capital
$49.72
Long term debt
-
Enterprise value
$99.67
Revenue
Latest Q
$74.51
Losses latest Q
-$35.04
Rev. from Web unit
$30.50
Annualized Web rev.
$122.00
Revenue multiple
Enterprise/Web annualized
0.82x
Market cap/Web annualized
1.22x
c 1998 Mecklermedia, Internet.com
Cyberian offers more than 115,000 items in its Web-based "store." Some 103,000 individual customers in over
140 countries worldwide purchased from Cyberian Outpost since inception in 1995.
Of that, Cyberian says more than 90,000 became customers since March 1, 1997, spending an average of
about $250, which it believes to be significantly higher than many other online retailers. However, we think
ONSALE (NASDAQ:ONSL - news) , the Web-based auctioneer, may have average sales that exceed that
amount and Egghead may be close also. Repeat customers accounted for approximately 48% of Cyberian net
sales in fiscal 1998.
Bottom line: if Cyberian can convince investors that its "story" is better than Egghead's it may command the kind
of valuation to support its desired capital raising amount of $63.25 million. At this juncture, though, we are
much warmer on Egghead and ONSALE based on valuation and sales, branding and momentum than COOL.
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