From the Calgary Herald:
calgaryherald.com
Sunday 13 December 1998
MBTI sees moo-lah on Web
Nasdaq-listed firm uses Net to sell to farmers
Tony Seskus, Calgary Herald
Chris Wood, Calgary Herald / Andy McKinnon wants his Nasdaq-listed MBT International of Cochrane to become the eBay of agriculture on the Net.
The founders of a virtual shopping mall for farmers hope a move from Cochrane's River Avenue to New York's Wall Street will bring their shareholders bushels of cash.
MBT International Inc. last month finally broke onto New York's Nasdaq stock exchange after a two-year effort by its president, former rodeo cowboy Andy McKinnon.
"It's a lot of fun," says the cowboy boot-clad executive whose company recorded a $9.4-million profit in 1997. "I'm not jumping up and down saying we're a $30 or $40 stock, but in my heart of hearts I know that."
That may sound ambitious for an upstart firm whose shares closed at $2 3/32 Friday. But McKinnon, who has seen his company grow from an idea in 1993 to an international marketer with revenues of about $18 million, is keeping the faith.
"If your name has Internet in it in the United States right now, you're a $30 to $40 stock," he says. "But most of them come to the market with their hands out, trying to raise another $10 million or $20 million to get something to where it should be, could be or might be.
"We came to the market as a performing business with a three-year history in a break-even position having financed ourselves within our own operations."
MBTI operates an Internet site where it sells a vast range of products to people associated with the agriculture industry.
McKinnon says his company is drawing comparisons to other Internet companies like eBay, where online auctions allow members to bid on merchandise.
EBay stock has shot from a low of $25 1Ú4 to as high as $234 1Ú8 since joining the market earlier this year. Much of the growth is based on the momentum of retail investors rushing to get in early on such bullish stock.
Web mania has swept up everything involving the Internet, including browsers, portals, Web pages and services selling books, CDs, stocks, cars, toys and used goods.
In September, Sun Microsystems Inc. of California bought Ottawa's Beduin Communications Inc. for an estimated $20 million. Founded a year ago, the company had only 12 employees and sales of $120,000. But it has a product that will allow users to access the Internet with cellular phones.
And in the spring of 1997, Cisco Systems of
California bought Canada's Skystone Systems for $89 million to get access to its Internet linking technology.
But even these rich deals pale in comparison to spectacular initial public offerings of stocks in tiny U.S. companies with no profits but interesting concepts for electronic commerce and other Internet services.
They include theglobe.com Inc., which jumped 700 per cent in its first day to reach a market capitalization of $620 million; EarthWeb Inc., which jumped 248 per cent and Broadcast.com Inc. which jumped 249 per cent.
"If these stocks went there on air, what's a real stock worth?" McKinnon quips, considering the value of his own stock.
Brian Pow, a technology analyst with Acumen Capital Partners in Calgary, expects many of the wildly traded Internet companies to come down in price as investors take a close look at their value.
"You have to look at the general frenzy," Pow says. "It's pretty well known that the average size of trade taking place is really the retail investor who is just reading about this and really getting hyped on things.
"From an investment community perspective, we've really sat back and said: 'What is the revenue potential of them?' And I think we're seeing that in terms of how stocks are starting to behave compared to even two or three weeks ago."
Confidence at MBTI that the company will be a long-term winner and not a flash in the pan is bolstered by five years of experience and a track record of profitability.
MBTI's roots are based in an idea McKinnon came up with 1993 to help horse brokers reach more buyers, modelling it after the real estate industry's Multiple Listings Service.
His plan was to build a database of horse photos and information that could be accessed by laptop computer and allow people to buy quality animals sight unseen.
McKinnon, who had been in the horse business for three decades, knew such a database would be well-received. After all, rural computer users outnumber urban users seven to one.
But the idea hit a snag.
The leading technology of the day allowed storage of only 200 photographs on a laptop -- far fewer than required to make the idea viable.
Rather than give up, McKinnon hired computer programmers to address the "insurmountable hurdle."
"I said if we can send a photo from Venus to Earth, we can do something here."
Sure enough, in 1995, new graphic technology allowed up to 8,000 animals to be stored on one laptop, and the company's business increased exponentially.
Using the technology, MBTI launched computer-based brokerages for horses, cattle, farm equipment and heavy industrial equipment in 1996. Each sector had its own exchange.
In August, the company unveiled its AgriMall Internet site (www.agrimall.com) to provide a high-speed delivery system for the four exchanges. The mall will eventually be a place for farmers to buy everything from clothing to cars and Siberian Tigers -- of which it has in fact sold two.
"We get two per cent on everything that goes through the system, and if you say it fast it's not a lot of money, but . . . probably by the end of the year 2000 we'll have well over a $1 billion worth of inventory on the system."
McKinnon says the company has done well because of a sound target market and a simple philosophy.
"I always say to people, there are two ways to hunt geese. One way is to point a gun in the air, pull the trigger and wait for the goose to fly through it. The other way is to line up on the goose and pull the trigger.
"The industry itself, because it's the World Wide Web, has the perception that all you have to do is keep pulling the trigger and something will fly through it. We're targeted specifically into a $300-billion-per-year industry -- the agriculture industry."
McKinnon says the company's goal is to build on what it has done and improve shareholder value. But if MBTI should continue to grow as it has, will it leave its picturesque home by the Rockies?
"No way," McKinnon says. "The international headquarters of MBTI will always be Cochrane."
The company is listed on the Nasdaq exchange with the ticker symbol MBTI.
With a report from the Ottawa Citizen
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