Onsale earnings miss the mark
By Kora McNaughton
Staff Writer, CNET News.com
April 15, 1999, 4:25 p.m. PT
With one fiscal quarter of at-cost sales under Onsale's belt, CEO Jerry Kaplan declared the wholesale pricing model a
success despite his company's report that it missed analysts' estimates.
Early in the first quarter, the Internet retailer launched its AtCost program, in which it sells computer and software products at
wholesale prices to consumers. The move was an attempt to increase revenues, although many questioned whether Onsale
would be able to keep its margins up.
Today Onsale went part of the way toward answering that question, reporting a net loss of $5.5
million, or 28 cents per share, wider than the consensus estimate of 27 cents per share, as reported
by First Call. Revenues topped $67.8 million, up 15 percent compared with the fourth quarter's $59
million.
In the same quarter last year, Onsale reported a loss of $4.2 million, or 22 cents per share, on $40.2
million in revenues.
"Even with the launch of the AtCost model, our margins held steady at nine percent for the quarter,"
Kaplan said in a statement.
Onsale said sales through its AtCost business produced 15 percent of total revenue, which
"exceeded expectations," according to Kaplan. The company also has an auction site, AtAuction.
Traffic to the Onsale site grew to 161,000 unique visitors per day, an increase of 16 percent compared to the previous quarter.
Repeat customers accounted for 73 percent of new orders, and the average order size increased to $239 from $190, the company
said.
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