Actually, from the 10q..
As of July 31, 1999 they had $3.1 million of cash and equivalents and $10.5 million of investments. Thus giving them 13.6 million in accessible capital. Add in another 30 million in recent cash infusions from Vulcan Ventures, and Highland Capital and you have a total of $43.6 million in working capital, looking back to July 31. If you assume a burn rate of approximately 4 million per qrtr, based on the past 3 qrtrs, they have enough working capital to go another 8-10 qrtrs, or 2 to 2-1/2 years, before they need any additional capital.
Now, if you take into consideration that they have spent the past (1), that's right, only one year forming alliances with companies such as MSFT, SUNW, GTE, QCOM, CPQ, DELL, Nortell, BEL, SAP, SYMC, ITRA, etc...(the list goes on) setting up corporate intranet bookstores with direct access to the employees of all of these companies, (we must be over a million eyeballs easy by now) I think it is easy to see why the company has not generated any earnings yet. They have been in a build-out stage. They still are actually. And like I said, I am not so sure that the old business model was quite enough to qualify the stock as a "high-flyer". But it will generate a good income for the company in the long run. So I see the old FATB as a viable business model.
Now, throw in Ematter. Ematter is easy money. Once the document is on the site, I beleive everything is automated. Whenever someone buys a document, FATB takes in the payment, allows you to download the document, and then sends you your royalties at the end of each qrtr. They get 1/2 of the royalties. So, just imagine if Anthony, or Mr P were to write an essay about their trading strategies and put it up for sale for 20 bucks. I would buy one, you might buy one, heck Anthony and Mr. P would buy each other's most likely. Before you know it, Fatbrain takes in 20 million dollars off of just one document, (assuming 1 million copies are sold). At the end of the qrtr, Fatbrain sends Mr. P or Anthony a check for $9,999,997, and they keep 10,000,003, (costs $1 per month to have your work on the site) See how easily and quickly FATB profits from this? You better go see who has been putting their works up...
biz.yahoo.com
Just one example mind you. There's more, lot's more.
So, there goes the cash burning model and in comes the cash. The next qrtr's earnings will not reflect profits from this, because they are running a promotional special.
FATBRAIN PAYMENT TERMS: For Material uploaded prior to October 15, 1999, Until December 31, 1999 ("Promotional Period"), for Material sold to a customer, Fatbrain shall pay Content Provider a royalty equal to 100% of the amount of the selling price specified during the upload process for the item, excluding any charges for taxes. After the Promotional Period, for Material sold to a customer, Fatbrain shall pay Content Provider a royalty equal to 50% of the amount of the selling price specified during the upload process for the item, excluding any charges for taxes. Fatbrain will pay Content Provider within thirty (30) days following the end of each quarter for Materials sold during that quarter.
If you are short, and I suspect you are as of Friday, you might want to consider that it is only going to take (1) good document to take FATB from red to green fast. You know what happens when these companies go green before the market expects them to. Add in a few too many short-sold shares and ....well, you know what I mean. Hey, I don't have a problem with you being short the stock. I hope it works out for you. It's really up to these market makers. I've been doing battle with them for over a year now. I just plunked down cash this time and I'm gonna let it ride for a while. I'll check it out in 6 months or so. I think they are gonna make a lot of money by the end of the 1st qrtr of 2000. I'll be dollar cost averaging my investment between now and then. Every week I will be buying some stock, until this makes up my allotment in my portfolio. Thanks for the conversation. Good luck to you. And think about sending something in to FATB to sell. You never know what is in your mind, that someone else might find interesting enough to buy. |
