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EBay touts high-end possibilities
Dispatches from Hambrecht & Quist conference
By CBS MarketWatch
Last Update: 7:50 PM ET Apr 27, 1999
Also: Tech Report Net Stocks
NewsWatch Silicon Stocks
Fresh off the announcement of EBay's acquisition of old-line San
Francisco auction house Butterfield & Butterfield, executives of the online
auctioneer expressed eagerness to start selling higher-end goods than the
Beanie Babies and Furby dolls on which it built its fame. Speaking
Tuesday at the Hambrecht & Quist technology conference in San
Francisco, Chief Financial Officer Gary Bengier noted that the operating
profit on a grandfather clock might be triple that on a white Furby. On the
clock, he said, the operating margin could be as high as 75 percent. Aside
from high-ticket items, according to Chief Executive Meg Whitman, EBay
(EBAY: news, msgs) is "looking for great things" from its brand-new Los
Angeles auction site and other localized sites to follow.
3Com CEO Eric Benhamou told investors in San Francisco the company
will attempt to improve performance of its palm pilot hand-held computers
in a bid to stay ahead of competing devices, many of which use a stripped
down operating system from Microsoft. The latest machine in the
company's Palm series, the Palm VII, features instant access to Internet
data and wireless internet messaging. Benhamou described the machine to
fund managers attending the Hambrecht & Quist Technology Conference
in San Francisco. Benhamou declined to comment on recent speculation
3Com (COMS: news, msgs) would be bought by Siemens, Ericsson, or
Intel. Speculation boosted shares last week. 3Com stock rose 1/4 to
close at 26 13/16 ahead of Benhamou's presentation.
VeriSign (VRSN: news, msgs) CEO Stratton Sclabos said the
company's second quarter is "off to a good start." Sclabos said VeriSign is
seeing increases in growth and net margins. VeriSign makes products to
help protect data being transmitted over the Internet. Sclabos said Y2K
issues aren't expected to slow demand for VeriSign's products and
services. He added the company was likely to announce more joint
marketing agreements.
Chief Operating Officer Edmond Sanctis of privately held Snap.com, of
which GE (GE: news, msgs) unit NBC owns 19 percent and CNet
(CNET: news, msgs) 81 percent, declined to comment on whether the
company plans to file for an IPO but said the idea "is on (our) mind."
Sanctis said NBC will launch a new promotional campaign for Snap.com.
One of the new advertisements elicited groans from the audience for being
a bit too treacly ("I think I need a moment," joked one member of the
audience). In addition, Snap.com is placing a "big bet on broadband."
Last month, the company launched a high-speed, multimedia-rich version
of its portal site, with several telecommunication service providers as
partners, including Bell Atlantic (BEL: news, msgs) and SBC
Communications (SBC: news, msgs). Hambrecht & Quist Internet
analyst Paul Noglows said that "Snap.com is the fastest-growing site on
the Web, period."
Entertainment software maker Electronic Arts (ERTS: news, msgs) plans
to have online operations generate 20 percent of total revenue within three
years, the company's chief financial officer, Stan McKee, said Tuesday.
McKee added its online unit is profitable, even though the company only
recently made its initial venture into online gaming. In September, EA
rolled out Ultima Online, and McKee said the online gaming offering has
125,000 paying subscribers. EA is planning five or six more online
offerings in the near future, he said.
E-Trade (EGRP: news, msgs) will introduce its next-generation trading
product in three weeks, said Gerry Gramaglia, senior vice president of
sales and marketing. Gramaglia said products will include several new
features, such as automatic pop-up and highlight of the value of the
customer's account. E-trade is also in tests to expand its service into
Japan and Sweden following its recent introduction in Canada and
Australia, he added. The company just passed the 1 million-account level,
said Gramaglia.
Pixar Animation Studios CEO Steve Jobs told investors and fund
managers in San Francisco "A Bug's Life" has now exceeded "Toy Story"
in worldwide theatrical receipts. Jobs said "A Bug's Life," which was
released last November, has taken in $357 million worldwide so far,
exceeding the $354 million take from "Toy Story," the high-tech studio's
first animated feature. "Animation is the most lucrative place to be in
Hollywood," Jobs said. Pixar won't experience a 36-month gap between
movies again, as it did between "Toy Story" and "A Bug's Life." Pixar's
new film "Toy Story 2" is expected to be released late this year. Pixar
(PIXR: news, msgs) expects no competition from other animated films at
the time of the release. "Bug's Life" faced off against a similar film called
"Antz" produced by Dreamworks last fall.
Jeff Howells, chief financial officer of of Tech Data Corp. (TECD: news,
msgs), a wholesale distributor of information technology products, said
"this is a dynamic time for Tech Data." Howells forecast that the company
could report $16 billion in sales for 1999, as the company continues to
expand vendor partnerships with such big-name tech companies as
Compaq, Hewlett-Packard, Cisco and IBM; grow its Web business; and
increase its international efforts. Howells said the company is on track to
report first-quarter revenue ranging from $3.7 billion to $3.9 billion, with
net income of 52 cents a share.
Lycos Chief Financial Officer Ted Philip said the company has more than
$200 million obligated to it through marketing and distribution deals, such
as the $52 million deal recently signed with WebMD. Philip said several
more deals will be announced "in the next several weeks," many of them
bigger than the one signed with WebMD. In the breakout session with
institutional investors, Philip said the Lycos (LCOS: news, msgs) merger
with USA Networks (USAI: news, msgs) will be put to a shareholder
vote. He declined to comment further, according to Ryan Jacob, portfolio
manager at The Internet Fund. "Lycos," Jacob observed, "isn't oblivious to
the fact that other portal properties have continued to see increases in
market value during the last few months."
SportsLine USA (SPLN: news, msgs) Chief Executive Michael Levy
said the company is "well on our way to overtaking (ESPN) decisively" in
terms of traffic over the "near term." SportsLine, he said, is also looking to
take over the official National Basketball Association and National
Football League sites in the coming years when their contracts with
ESPN, a Disney (DIS: news, msgs) property, expire. "We'll make every
effort to capture those sites," Levy said. Levy announced a venture with
NFLeurope.com that, he said, he hopes will lead to further wins in
creating official league sites. The executive also said that America Online
(AOL: news, msgs) users account for as much as 40 percent of traffic to
the CBS SportsLine site during nighttime and weekend periods. CBS, a
major shareholder in MarketWatch.com, the publisher of this site, holds a
significant stake in SportsLine.
Legato Systems (LGTO: news, msgs) will show a "nice uptick" in sales
in the second half of the year as its storage management deal with
Compaq Computers (CPQ: news, msgs) bears fruit, said the company's
president, Louis Cole. Legato has benefited from the boom in online
transactions as businesses look to store that data. Over the past five
years, the company has increased sales 72 percent while doubling net
income annually.
Veritas Software (VRTS: news, msgs) sees its $3 billion acquisitions of
a Seagate software division closing on May 28. The combined company
will increase both revenue and earnings at least 50 percent per year, the
company's Chief Financial Officer Ken Lonchar told CBS
MarketWatch.com. Lonchar added that he has seen "no shift in buying
patterns" at businesses due to possible Year 2000 glitches.
Computer Associates (CA: news, msgs) is "on track" to close its $3.5
billion acquisition of Platinum Technology this summer, Doug Robinson,
the company's head of investor relations, said. The deal, announced one
month ago, is one of the largest in the software industry. Robinson added
the deal will increase earnings in the first 12 months.
Western Digital (WDC: news, msgs) Chief Executive Chuck Haggerty
said the company is excited about its growth prospects. He said he
expects the company's core business to return to profitability in the second
quarter. The company manufactures hard disk drives, selling the vast
majority -- more than 90 percent -- of its products to the desktop PC
market. Haggerty said he sees cash flow at the break-even point in the
first quarter.
Intuit Chairman Scott Cook laid out a plan for his company to prepare a
tax return in only two minutes for Internet users. Although the service
won't be immediately available, Cook said, Intuit (INTU: news, msgs) is
preparing a way for its software to query financial institutions and
automatically fill in a tax form. "That's where we're headed, and it's only
possible with Web interconnectivity," Cook said. Intuit reported 181
million page views to its Quicken.com Web site in March. The site has a
reach of 5.8 percent, which ties it with Yahoo for top position.
U.S. Web (USWB: news, msgs) plans to expand its Internet-marketing
services into Asia and Latin America this year, Chief Executive Robert
Shaw said. The company now serves the U.S. and European markets.
Additionally, Shaw said progress in integrating operations from recent
acquisitions, including CKS, is running a month ahead of schedule. When
the combinations are complete, Shaw expects business to take off.
"Sometime this summer, we will be hindered (in growth) only by how fast
we can hire talent for this robust market," he said. The Web-services
business is projected to grow to $40 billion by 2002, quadrupling last
year's volume, Shaw said.
Plus: See highlights from Monday's conference lineup
Data: Also see latest prices on leading Internet stocks
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