Auteo Media Inc -
Research Investment Group Initiates Investment Coverage of Auteo Media, Inc. (OTC-BB: AUTM)
Auteo Media Inc AUTM
Shares issued 0 1899-12-30 close $0
Friday Apr 7 2000
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Research Investment Group Initiates Investment Coverage of
Auteo Media, Inc. (OTC-BB: AUTM)
With A Six Month Price Target of US$25
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THE INTERNET HAS TOTALLY CHANGED
HOW PEOPLE BUY AND SELL CARS & TRUCKS
We all know that the Internet has forever changed the way we shop for many products. When you want to buy a book, do you run out to your neighborhood bookstore, or just log onto Amazon.com? Personal computers are rapidly replacing the need to drive to retail storefronts for most purchases.
DataQuest reports that about 80 million Americans are now on-line, and Nielsen Media Research estimates that over 30% of those who go online do so to make purchases. 70% of "cybershoppers" are over 40 years old with above average incomes, the preferred clientele of the automotive industry. With an estimated $1 trillion dollars in sales in the U.S. alone, the automotive retail market may represent the largest e-commerce opportunity.
Currently, e-commerce accounts for only about 4% ($19 billion) of new and used vehicle sales. Business 2.0 estimates this share will increase to 20% ($136 billion) by 2003. J.D. Power and Associates notes that about 25% of car and truck purchasers used the Internet to search for information on vehicles or otherwise assist them with their purchases in 1999, and that this figure should increase to approximately 37% by the end of 2000.
When it comes to Internet marketing, the automotive industry is still in the Dark Ages.
N.A.D.A. (National Automotive Dealer Association) estimates that each year the 22,000 franchised car dealerships in the United States collectively spend over $5 billion in marketing (about $225,000 per dealership or $440 per vehicle sold), but that only about 1% ($50 million) of this budget is spent on the Internet.
However, as more and more business owners realize the tremendous cost savings that can be realized by proper Internet marketing (Autobytel claims that their buying service reduces the marketing cost from $350 per vehicle sale down to $86), Forrester Research projects that new and used vehicle dealerships will increase their annual spending on Internet marketing to more than $600 million by 2002.
Internet vehicle marketing services and automotive e-commerce are hot markets. Michael Dell has reportedly invested $100 million in CarsDirect.com, a private car buying service company.
We believe that Auteo Media, Inc. (OTC-BB: AUTM) has positioned itself at the forefront of this growing automotive e-commerce / Internet trend by creating a portfolio of the most-convenient and cost-effective Internet-based solution for buyers and sellers of both new and used cars.
We believe that the content, Internet sites and tools AUTM provides have excellent revenue potential and that as the company expands nation-wide, the equity markets will award significant value to AUTM shares. Additionally, since the company currently has increasing revenues and diversified product lines, Auteo Media should prosper even if typical Internet companies decline in value.
AUTEO MEDIA IS EXPANDING NATIONWIDE WITH ITS REVOLUTIONARY
MIX OF AUTOMOTIVE SALES, MARKETING AND E-COMMERCE PRODUCTS & SERVICES
Auteo Media is a fully-reporting company that provides a unique blend of automotive products and solutions to consumers and car dealerships through its five business units and e-commerce sites:
* Northwest and California Dealer Specialties
* Autoloco.com
* BidThatCar.com
* PartCart.com
* PocketAuto.com and ContactAuto.com
Auteo Media's subsidiary, TYSA Corporation, presently operates a very profitable Internet and point-of-purchase business in Washington and Claifornia; the company's web site is located at auteo.com. For the current year, AUTM is projecting revenues of $2.1 million increasing to $13.8 million in 2002.
AUTEO MEDIA's CORE BUSINESS IS PROVIDING CUTTING-EDGE
INTERNET MARKETING SERVICES TO NEW & USED CAR DEALERSHIPS
AUTM's core business currently focuses on collecting vehicle data and providing point-of-purchase Internet marketing services to automobile consumers and dealers.
Auteo Media personnel visit over 120 new and used car dealerships each week. Once there, the account specialists key into their laptop all significant data about the vehicles offered for sale (make, model, price, options, etc.). Each night, the specialists download the vehicle data and digital photos to Autoloco.com as well as the leading Internet web sites and buying services, including Autobytel.com, Microsoft's CarPoint, Autoweb.com, AutoTrader.com and GetAuto.com.
The services offered by AUTM cannot be easily performed by the dealership, and certainly not at the volume prices offered by Auteo Media. In an on-line world, dealerships will always need someone to collect data and download it to web sites. For its services, AUTM charges about $11 per vehicle, with payment made at the time service is provided (the Company does not have to rely on the sale of the car in order to earn its fees).
In less than two years, AUTM has grown from 35 accounts to over 120, effectively tripling revenues and profits. Despite this high growth rate, management estimates that roughly 70% of new car dealerships and 95% of used car dealerships in Washington and California remain as potential customers.
By 2002, ATUM expects to be generating over $3 million in annual revenues from just the west coast markets, based on some very conservative market share estimates. Auteo Media is also evaluating opportunities to move into or acquire additional markets with high revenue potential such as Phoenix, Las Vegas and others.
Autoloco.com OFFERS CONSUMERS A BETTER WAY TO BUY NEW & USED VEHICLES
With Autoloco.com ( autoloco.com ) and BidThatCar.com ( bidthatcar.com ), Auteo Media has created the premier new and used vehicle web site for Washington state, with information on 10,000 local vehicles from 120 dealerships. On a monthly basis, the site is currently providing over 1,000 sales leads and an estimated 5,000 phone calls and visits to the dealerships by customers.
Among the key benefits offered by the two web site are: the ability to see the window sticker, digital pictures and warranty information on 10,000 local vehicles; links to dealership mini-web sites where buyers can learn about them and browse their inventory; and, the ability to apply for financing, request a vehicle "lemon report", or link to over 100 other auto-related web sites.
AUTM has already begun an aggressive expansion of Autoloco.com into the California markets. During the coming year, AUTM will continue to expand geographic coverage of the Autoloco.com site, with expectations of moving nation-wide in the second quarter of fiscal year 2000.
Autoloco.com offers AUTM a unique opportunity to capture online shoppers for vehicles, automotive parts and accessories, financing and other services. Part of the company's strategy is to link visitors to the Autoloco.com site to BidThatCar.com ( bidthatcar.com ), a site that will offer a real time bidding environment for the sales of new and used vehicles, where shoppers will be able to solicit bids on a new car from all of the dealerships representing that make, or submit bids on any of the used vehicles in the Company's database.
Although these services have historically been offered free of charge to dealers, AUTM plans to begin assessing a nominal fee for placement of their cars onto these sites. By comparison, dealerships are currently paying $1,000 to $3,000 per month for premium sites such as CarPoint, AutoMall/TCI and Autobytel for essentially the same services.
Longer-term, we see the Autoloco.com and BidThatCar.com sites as being prime acquisition targets.
PocketAuto.com WILL PROVIDE VEHICLE INFORMATION VIA CELL PHONES & PDAs
PocketAuto ( pocketauto.com ) and PalmAuto.com ( palmauto.com ) are an innovative, Internet-based system that will allow auto dealers and consumers to communicate and obtain real-time information on vehicles and dealership inventory / pricing data via digital cellular phones or pocket digital assistants (PDA). This system will allow sales personnel to immediately display the window label of a vehicle and respond via e-mail with a price or appointment time in a few minutes.
Auteo Media is in discussions with a major long distance and cellular phone company for such services and is highly optimistic about its ability to secure a relationship. PocketAuto.com will be introduced later this year.
We believe that all franchised and used car dealerships across the county are candidates for this service. Potentially, this could be a $100 plus million market, serving an estimated 22,000 franchised dealerships and 10,000 used car businesses. Preliminary market research suggests that a monthly fee of $30 would be acceptable to the industry.
We believe that AUTM has an excellent opportunity to capture this market segment since no other competitive products are currently available.
AUTM IS DEVELOPING UNIQUE TECHNOLOGY FOR CUSTOMER CONTACT MANAGEMENT
Contactauto.com ( contactauto.com ) is an Internet based contact management system that allows car dealership personnel to store, analyze, track, contact and manage the multitude of e-mail, walk-ins and phone calls of car shoppers.
Dealerships pay a lot of money to get customers to contact, e-mail or drive to their location. The need to create, control and manage these contacts, whether they purchased a car or not is of great demand by management. Most current Contact Management tools are not designed for the needs of car dealerships or are difficult to utilize since they are software instead of Internet based.
According to AMR Research of Boston states Customer Management Software is a $3.71 Billion dollar market expected to top $16.8 in 2003. N.A.D.A. states there are over 20,000 sales personnel at their associated dealers. It is estimated that an additional 15,000 are employed at non-franchised dealerships.
Since Auteo Media's core business is to promote e-mail and phone communications between customers and dealerships they are in a unique position to effectively offer such a contact management system nationwide. AUTM is in the late stages of development of ContactAuto.com that is Internet based and accessed through the Company's wireless devices or from any personal computer.
Longer-term, we see the ContactAuto.com expanding out of the automotive industry and into broader markets worldwide.
AUTM IS PLANNING AN AGGRESSIVE
EXPANSION INTO THE LUCRATIVE AUTO PARTS MARKET
PartCart.com ( partcart.com ) is being developed as a comprehensive e-commerce site that allows automobile owners and dealers to purchase over 50,000 OEM and after-market parts and accessories.
Although the Internet has greatly changed how consumers buy and sell vehicles, this sales and distribution revolution is only just beginning to impact the market for specialty auto parts. Unlike inexpensive or general maintenance parts that are needed immediately to get a vehicle in running condition, the specialty parts market is more impulse-driven and lends itself ideally to e-commerce since retail outlets are often difficult to locate and price / availability are often major considerations.
According to SEMA (Specialty Equipment and Manufacturing Association), the specialty equipment market in the United States has been growing at an annual rate of 8%, and retail sales this year are projected to top $23 billion.
AUTM is in a unique position of being able to enter this market owing to a relationship with one of the largest specialty equipment wholesalers in the country. Auteo Media is currently in negotiations to provide an Internet forum for part purchases with all packing and shipping provided by its supplier. AUTM will also be able to leverage its Internet presence with its other web sites to link customers to PartCart.com.
Additionally, due to its business relationships with over 100 franchised dealerships, AUTM is in a position to purchase, at wholesale levels, auto accessories from Ford, GM, Daimler/Chrysler, Toyota and Honda.
For AUTM, this segment of their business is anticipated to be a high volume, low margin operation; AUTM will provide limited to no packaging or warehousing of product. The Company will attempt to source and market parts and accessories from the burgeoning Asian automotive industry that offer higher margins.
WE BELIEVE THAT AUTEO MEDIA IS POSITIONED TO BECOME A DOMINANT
PLAYER AMONG INTERNET-FOCUSED AUTOMOTIVE MARKETING/E-COMMERCE FIRMS
Auteo Media combines a unique blend of automotive products and solutions to consumers and new / used car dealerships through its five business units and e-commerce sites.
"We have found that consumers and car dealerships wanted and need a simple-to-use and trusted link to help them locate the right service to showcase their products and needs," says Steve Van Leeuwen, President of AUTM. "By using the Internet, we are able to re-invent, simplify and improve the automotive marketing experience for everyone, and help customers and car dealerships communicate, share information and make their decisions with confidence."
The markets the Company is targeting or currently dominates are broad and allow for excellent profit margins. Auteo Media will be unique among those in e-commerce in that it has increasing revenues and a proven profit model. They will attempt to rely as little as possible on external infusion of capital.
We believe that Auteo Media's business model is on-target.
Strategically, AUTM is modeling itself after one of the most successful Internet commerce companies, CMGI (NASDAQ: CMGI), offering not one high-risk enterprise, but a portfolio of Internet products and technologies that capitalize on each other, reducing risk while exponentially increasing shareholder value.
Auteo Media is currently expanding its operations into California, a market that offers four times the revenue and profit potential as its existing Washington base.
Lastly, we would note that due to the immense size of the American automotive industry, publicly-traded Internet companies targeting this market have enjoyed excellent market capitalizations. Major players (none of whom are profitable like AUTM) such as Autobytel.com and Autoweb.com are valued at $162 and $223 million, respectively.
The company has entered into a letter of intent with Abstract Enterprises Corporation, (AEP: Canadian Venture Exchange), based in Vancouver, Canada. Under the terms of the agreement, Abstract shareholders will receive one share of Auteo Media for every four shares of Abstract Enterprises Corporation. The acquisition will be accounted for as a pooling of interests and is expected to close in the quarter ending June 30, 2000. Upon completion of the transaction, approximately 8.75 million shares of Auteo Media will be outstanding. The acquisition is subject to various closing conditions and has been approved by the board of directors of Auteo Media. Steve Van Leeuwen will remain President and Chief Executive Officer, of Auteo Media which will continue to operate under the name Auteo Media and be headquartered in Seattle, Washington. Auteo Media, Inc. currently owns 82.5% of TYSA Corporation. Abstract Enterprises Corporation holds 5% of TYSA Corporation and also holds an option to acquire an additional 12.5% interest in TYSA. By acquiring Abstract Enterprises, Auteo Media gains full control and ownership of TYSA Corporation.
SHARE STRUCTURE & RECENT TRADING RANGE
Total Shares Outstanding: 8,325,000
Fully-diluted: 8,550,000
52-week Trading Range: US$4.38 (low) by US$8.75 (high)
Last Trade (March 30, 2000): US$8.25
The company has approximately US$100,000 in working capital and no debt. There are 225,000 stock purchase warrants exercisable until February 2001 at a strike price of US$8 per share.
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For additional information, please contact:
Steve Van Leeuwen (President - Auteo Media, Inc.)
Phone: (206) 368 - 4010
E-mail:
mailto:steve@autoloco.com
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DISCLAIMER - PLEASE READ
Research Investment Group is not a Registered Investment Advisor or a Broker / Dealer. Readers are advised that this report is issued solely for information purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy. Reproduction of this report, in whole or in part, by any means, electronic or otherwise, including via the Internet, without prior written permission, is strictly prohibited.
Research Investment Group has independently prepared this report, drawing upon a range of public news and information sources, as well as data and opinions provided by Auteo Media, Inc. ("AUTM" or the "Company"). Prior to publication of this report, the Company reviewed and approved the contents hereof. Research Investment Group has not independently verified the Company 's representations. Any opinions expressed in this report are statements of judgment as of the date of publication (28 March 2000) and are subject to change without further notice, and may not necessarily be reprinted in future publications or elsewhere. Neither Research Investment Group nor its owners, employees or consultants accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
The information contained herein is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. The opinions and analysis included herein are based on sources believed by Research Investment Group to be reliable and in good faith but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. The foregoing discussion also contains forward-looking statements that are based on current expectations and differences can be expected. The information and opinions contained herein is not intended to be a complete discussion of information regarding some of the current and/or intended business activities of the Company, and all information contained in this report should be independently verified with the Company. Readers are urged to consult with independent financial advisors with respect to an investment in the shares mentioned herein. Investors should review a complete information package on the Company which should include, but not be limited to, the Company's annual report, quarterly report, press releases, as well as all regulatory filings.
In order to be in full compliance with the Securities Act of 1933, Section 17(b), Research Investment Group advises readers of this report that it has received a fee of 25,000 free-trading common shares of AUTM from Sabre Communications for its efforts in researching, writing and disseminating the information contained herein. Research Investment Group, its owners, employees and consultants may profit in the event the shares of the Company increase in value. These positions may be liquidated from time to time even after Publisher, its owners, employees and consultants have made positive comments regarding the Company.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. INVESTORS MUST ALSO INDEPENDENTLY VERIFY THE "BLUE SKY" ELIGIBILITY OF THE SECURITY MENTIONED IN THIS REPORT BEFORE MAKING ANY INVESTMENT DECISIONS. TIMING OF, AND ANY BUYING OR SELLING DECISIONS, ARE THE SOLE RESPONSIBILITY OF THE READER.
Research Investment Group encourages readers to review the investing information available from the Securities and Exchange Commission ("SEC") at sec.gov and/or the National Association of Securities Dealers ("NASD") at nasdr.com The NASD has published information on how to invest carefully at its website.
AUTM is a fully-reporting company with the SEC. The Company's Form 10-SB filing (submitted on September 3, 1999 by Flintlock Financial Services, Inc. -- the predecessor company to AUTM) may be viewed at: freeedgar.com
Readers may access and review all of Auteo Media / Flintlock Financial Services' SEC filings at freeedgar.com and searching the EDGAR database.
(c) 2000 Research Investment Group
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
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