Cary, you did a time reversal transformation on their 1998 and 1997 9 months earnings. In 98 they were down relative to 97 not the other way around. This is a negative, and probably the reason we are getting a shot at an undervalued stock, now we are facing the turnaround, first in the top line, and later in the bottom line as well, I hope. But, the reason we had the jump is the realization by some market participants that PROG is a potentially powerful web player because it has multichannel distribution systems. What will take the market some time to realize with other net companies involved with e-commerce is that presence in different channels of distribution is critical to the success of a brand. EGGS is going to find that their becoming an e-commerce only outfit will weaken their position.
PROG has an asset which is extremely valuable and that is a tremendous base of customers ready and willing to go via the web, and having done business before with PROG. I think that the market may put a premium on companies having these multiple channels.
Look into the future and try and fathom who will control the e-tail market, in my opinion, few of the upstart with no brand names will be there five years hence, but the stalwarts of retailing will become the kings of e-tail together with a minority of e-tailers that somehow managed to build up brand name recognition before the giant come into the fray. The big battle between Barnes&Noble and Amazon.com will be the template for future struggle. Well, there is no one to fight with PROG in their arena, and I can see them easily spreading their wings from professional software to all software once their web is smoothly handling their core business. EGGS will have big troubles IMHO.
Zeev |
