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Microcap & Penny Stocks : Bid.com International (BIDS)

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To: GoNorth who wrote (23161)	4/20/1999 4:50:00 PM
From: Cameron	Read Replies (1) of 37507

Actually.. you were probably using old information in your break even analysis. Their GP for 1998 was 3.6% but if you review their Q4 results you'll see that their efforts to improve profitability, which commenced in Q2, were highly successful and in Q4 their GP increased to 6.9%. (This could be compared to ubid which is at 8.0%). While there is still room for improvement, I think you'll agree this is a major step in the right direction. To be very conservative, let's assume that they don't improve their GP level. Their only expenses are marketing and admin. They have tax losses to carry forward well into the future and they have no debt. In 1998 marketing and admin came to $11.8mm with marketing representing 69% of the this total. Marketing is certainly discretionary but again, to be conservative let's assume they spend 10% more in this area. Based on the above, their breakeven would be revenue of approx. $171million. Less than half the $400mm you calculated based on the lower GP figure. The thing to remember is that they generated their revenue last year almost exclusively in the hardware arena. Their offerings are much broader right now and continue to expand - meeting more needs and attracting new consumers. They are also selling marketing space on their sight - pure 100% profit delivery. Their business to business model should also deliver significant GP improvements... business to business always does as will their ongoing efforts to improve GP as demonstrated in the latter half of 1998. And Canadian companies can do very well in Europe (Who's the network infrastructure market share leader in Europe? Cisco? Luscent? No - Newbridge Networks). They won't break even this year.. but they sure as hell might in 2001. A 1 year horizon isn't very long at all. In any event, let's let the Q1 results speak for themselves.

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