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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: brent gephart who wrote (3653)	11/23/1998 12:26:00 PM
From: Kip518	Read Replies (3) \| Respond to of 8307

Steve Harmon on EGGS: First reader up this week writes: "I know you have talked about egghead.com during the past year, but I would be really interested in getting your assessment of the company's future near-term prospects (6 to 12 months), in light of the scalability of its new Web site (unveiled this weekend), and the company's potential for greater e-commerce market share." Reply: Egghead (NASDAQ:EGGS) fiscal 1999 second quarter ended September 26, 1998 revenue was up 73% to $35.1 million vs. ongoing revenue for 2Q98. Loss for the latest quarter increased to $7.2 million vs. $4.9 million 2Q98, so there's some issues involved in being a Web-based "startup-like" firm. Annualized EGGS revenue would be $140 million, implying a revenue multiple of 2.3x. For 1999 we estimate EGGS revenue could be $195 million, slating the revenue multiple at 1.6x. For comparison, many Internet e-tail firms regularly trade between 5x to 10x, or more. Egghead, as many of you e-mailed us about, just debuted a "new and improved" Web site that blends its e-tail, auction and surplus sales into an easier to use frontend. The site also features merchandise in other non-techie categories such as sporting goods--at least it purports to. But our search for "soccer" yielded some crazy results including a PC and a Iomega ZIP drive, which has zero to do with soccer. We applaud Egghead's move from terrestrial-based heavy overhead bricks and mortar to "zero G" (Internet commerce) but give it a thumbs down on trying to be a general purpose e-tailer, especially without having the selection to back up the pitch. See our past ISR for more, click here.