I would not be surprised to see Yahoo purchase OnSale within the next 12 months, especially if OnSale can improve profit margins so that they would not be a drag on Yahoo's profit margins.
I would like to see OnSale convert to a model whereby they auction off excess inventory for PC manufacturers, where the inventory gets shipped directly from the manufacturer, so that OnSale never has to touch the inventory. Onsale would get a cut (say 5 percent), and it is this cut that would be counted as revenue (not the entire amount).
Then, OnSale's margins would go through the roof, coming much closer to eBay's margins. Revenues would decline in the short-term, but Wall Street would put a much higher valuation on OnSale.
If the market for new PCs in a given year is $100B, it would be reasonable to assume that the market for used/refurbished PCs is $20B.
If OnSale were to represent 20 percent of the used market, and get a 5 percent sales commission on that, it would have $200M a year in high margin revenue on PCs alone. Add in PC accessories (printers, modems, memory). Then, add in all the other types of non-computer products Onsale is beginning to represent, and one could easily see 3 to 5 times what PCs bring in.
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