another nice mention of bids in the wsj:
Dow Jones Newswires -- April 23, 1999
Bid.Com Stk Up Along With Other Internet Auction Cos.
By Scott Adams
TORONTO (Dow Jones)--Bid.Com International Inc. (BIDS) is up 17% Friday, recovering some of the ground it lost in a three-day slide after listing on the Nasdaq exchange Tuesday.
On Nasdaq, the company's stock is up 1 15/32 to 9 31/32.
Other Internet auction and Internet retail stocks are also also flying higher Friday. Onsale Inc. (ONSL) is up 13%, or 3 3/16 to 27 3/16, and eBay Inc. (EBAY) is up 15%, or 27 to 199. Internet retailer Amazon.com Inc. (AMZN) is up about 11%, or 20 to 211, as it and eBay are expected to announce earnings next week.
uBid Inc. (UBID), another online auction company, reported strong first-quarter results late Thursday. It had revenues of US$34.3 million in the first quarter ended March 31, up 42% from fourth-quarter revenues of US$24.1 million. uBid had 377,000 registered users at the end of the quarter, up 65% from the preceding quarter.
In the fourth quarter ended Dec. 31, Bid.Com had revenues of C$6.4 million. The company is due to report its first-quarter results in May. Bid.Com's registered users numbered 108,000 at April 14, according to the company's financial documents. Bid.Com's revenues were C$20.1 million or US$13.1 million for all of 1998, of which C$270,000 came from Canada. Bid.Com has projected that it will increase its revenues to about C$50 million in 1999, as it has aggressive diversification plans.
Bid.Com also hopes to license its patented Internet Dutch Auction process. Dutch auctions involve declining prices, as opposed to normal auctions which involve rising prices.
Next week Bid.Com will launch a new audio and video version of its Dutch auction Internet site.
As of the close of trading Thursday, uBid had a market capitalization of US$468 million, while Bid.Com had a market capitalization of about US$425 million.
Earlier this month, Onsale fell after reporting first-quarter results and after saying that it expects gross margins to suffer and its operating expenses to increase as it faces increased competition to win market share in the Internet retail space.
Bid.Com shares have fallen steeply since reaching a 52-week high earlier this month in Toronto of C$32.35, as investors have taken profits on the news that the company actually obtained a Nasdaq listing.
As well, the firm's underwriter, Yorkton Securities Inc., downgraded the firm's stock to "underperform" from "speculative buy" Wednesday, saying the true value of the company against its peers is only about C$2 to C$3 a share. Yorkton's move prompted angry responses from loyal investors discussing the stock on Internet chat lines.
Philip Strathy, vice president investments at Strathy Investment Management Inc. in Toronto, said Bid.Com is sharply overvalued versus its peers, but added that its stock trades on sentiment rather than fundamental value.
"The fundamentals do not support the valuation," Strathy said. "It is certainly the purest form of gambling available on the stock exchange today, " he said. "The stock has virtually had everything thrown against it. Even Yorkton came out and said it is essentially worth nothing and the stock is up here. It is an extreme speculative bubble. At least some of the leaders, AOL and Amazon, have pretty awesome business models. (Bid.Com's) business model is okay at best," he said, adding he was once an investor, but is no longer.
"It is all momentum. We don't know how it is going to close, but it is the sort of thing you don't want to go long on the weekend with. But it's got great momentum, it's extremely liquid, it's got everything that a day-trader needs and that's who is driving it, clearly," Strathy said.
uBid's gross profit in the first quarter was US$3 million. Bid.Com had a gross profit of C$438,000 for its fourth quarter. However, Bid.Com sells many of its goods at below cost and follows the unusual accounting move of booking these losses as a sales and marketing expense, justifying this by saying that it sells goods at a loss to increase market share.
uBid and Onsale include losses from goods sold at below cost in their gross margins, as do most retail companies. If Bid.Com had included its goods sold at below cost in its gross margin, it would have reported a negative gross margin of about C$470,000 for the fourth quarter, according to financial results filed at the time of the Nasdaq listing and a recent special warrants prospectus.
-By Scott Adams; 416-943-7804; scott.adams@dowjones.ca
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