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Technology Stocks : eBay - Superb Internet Business Model
EBAY 83.82+3.7%Nov 7 9:30 AM EST
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To: J. C. Dithers who wrote (2009)3/7/1999 11:31:00 AM
From: John P. Henrie  Read Replies (2) of 7772
 
RE: I appreciate your honest response.

I also believe the Internet will revolutionize commerce. However, I am not convinced that the YHOOs, AMZNs, and EBAYs can maintain their "Captive Audience". I am also not convinced that these companies can generate the profits necessary to support present valuations.

I shop on the Internet. Neither, YHOO, AMZN, EBAY or any other Internet company has me captivated. With a couple of clicks of my key board, I can compare the price and shipping costs of any product offered on the Internet. The cost of comparison shopping is almost nothing. One of the great benefits of the Internet will be to remove the middle person and increase competition, causing product prices to drop and profit margins to constrict.

I have watched the Internet companies experience substantial revenues growth (note: in relation to their present market capitalization the growth is insignificant). Even with great gross margins, they have made very little money or have lost money. What magic wand will it take to turn these companies into profit machines. No one has ever had a reasonable answer.

I think the weak link in the Internet chain is your professed strngth. I do no believe these companies will be able to keep their audiences captive. Its just to easy to go somewhere else in cyberspace. The cost of comparison shopping has been practically eliminated. Profit margins will not improve but decline.

JP Henrie
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