Another call with PROG's CTO, John Broderick:
Whisper numbers: I told him that earningswhispers.com lowered the whisper number from $.36 to $.33. He said, "Good!" We talked about that for a minute. Based on that discussion, I feel that PROG will hit their estimated number of $.28 and perhaps even beat that number by a penny or two. But we should leave it at that.
I'll try to capture what I can remember: 1999's focus is totally the internet. Improving the site was key, (Mostly done). They're way of doing business is a focused approach: Very few banner ads. They go to content providers and build those relationships instead. The PROG catalogue serves as their banner advertising. It pays for itself, as the PROG advertisers pay for the printing, etc.. The catalogue is to there to drive customers to their web site. As the web site buying grows (And it already is), the PROG margins go up, (Better earnings, but hey, maybe the internut types won't like better eranings!!!!)
They intend to add much, much, much more content to the web site. Hardware is an example of their goal to allow their customers one stop shopping. (They will inventory no hardware. They'll use the drop-ship, DELL model.)
PROG is the #1 reseller in Germany. Their Dutch division has 12% profit margins and since they're showing the most profit, they're going to let the Dutch have more responsibility in 1999; like all the U.K., etc.
I asked him about burning cash and will they need to raise money. He said, "No need to raise money. Cash positive each quarter. Tend to build cash balance at end of the year. We are never negatively impacting working capital."
They will go on a road show in early February. PROG will be in New York on the 2nd, and San Francisco on the 3rd or 4th. (I'll try to meet up with them while they're in San Francisco.) They like to do the road shows at the end of each quarter. Why? To pretty much stay close to investors. Only 2 analysts following the company that he knows of.
There will be a conference call after earnings are reported on Thursday. He's faxing me the number. I will post, later. Earnings will come out before the market opens, on Thursday.
I asked him his biggest fear: "That the internet is unknown. Some company like Beyond.com could try to enter our space and make a commodity of prices."
Do you get envious of EGGS market cap? He said, "Yeah, we might complain about it once in awhile. But, they're business is different. We're making money. We hope our stock goes up, but not too whacko. The bubble's gotta burst sometime."
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