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Non-Tech : Valley Media (VMIX) IPO
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To: Blue On Black who wrote (35)4/3/1999 11:03:00 AM
From: Paul Hackett  Read Replies (1) of 298
 
Tremendous upside potential with a lot less risk than a pure Internet play. Think about this (from the S-1):

>>>New Media, our Internet sales, support and data division, is our fastest growing
business. Its revenues increased 542%, from $17.6 million in the nine months
ended December 1997 to $113.0 million in the corresponding period of 1998.
Access to our extensive catalog is particularly valuable to on-line retailers as
their customers tend to buy higher proportions of deep catalog titles relative
to hits than do traditional shoppers. We have developed databases that serve as
an integral part of Internet retailers' product information and ordering
systems. Our value-added services enable Internet retailers to outsource
operating capabilities instead of making the substantial investment to build
their own inventories and infrastructure.<<<

Now consider these items:

- a 300% growth in New Media (Internet related) revenues for the calendar year 1999 will mean an additional $600 million in revenues from Internet related sales alone.

- less than 4 million shares in the float

- a reduction of 40% in debt after IPO proceeds are applied.

The revenue growth is going to be outstanding for this company, even with slim margins that looks great for the financials and the P/E. Rmember this company has negligible marketing expenses unlike the Internet plays. And they are selling the same product over and over again to all the major music ecommerce retailers. It would hurt if Amazon did start to purchase more quantities directly from the music labels. But there is still CDNow and all the other second tier etailers. Not to mention video and DVD sales.

This is what I would consider to be a "pick and axe" company for the Internet e-commerce retailers.

It does need more attention from the Internet crowd and looks like its starting to get it with Thursday's action.
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