Thanks, Terry. The concept of branding and leveraging is common in business. My dad used to be in the egg products manufacturing business and they would make cake mixes for about 40 different food distributors and package them under their different labels. Identical product, different label for each different distributor. Netmarket is the same product with a different distributor: E4L , Inc. People get a better deal by joining through E4L, though, because of the phone cards, etc. E4L, Inc. is taking time they already own and customers who already use their services to sell a product (Netmarket) that somebody else (Cendant) maintains to gain leveraged benefits (their commission). Of course, this is not the only thing the new management is doing, but that seems to be the most controversial concept and the thing people focus on.
Just as important to me, as an investor, are steps they are taking to make their infomercials profitable, both in production of the products that they advertise (by finding cheaper sources of equal or better quality goods) and in the business aspect of infomercial production (closing down offices that don't tow the line, doing production in house in L.A., using staff to produce the shows,etc.). They also have "incentivized" the company so that all employees can purchase company stock. The are dramatically changing the company M.O. and this is reflected in the business plan and their actions in the past 120 days.
The links they have to Broadcast.com are a plus since the site is highly travelled and the rates are no doubt "very good" for E4L considering that the head of Broadcast.com is on the E4L, Inc. Board. Take a look at the makeup of the board and you can see both why and how Lehman will change the face of this company from merely infomercials to a marriage of TV, radio and the internet in the same way Broadcast.com and others (I own NAVR stock, too) have merged radio and the internet. This is why E4L, Inc. is in TheStreet.com's e-commerce index.
I agree that the leveraging concept can be confusing and I mean no disrespect to any posters who are sincerely interested in understanding how this company works. |
