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

To: Anaxagoras who wrote (4075)	11/29/1998 12:59:00 PM
From: shane hartman	Respond to of 8307

>there are no barriers to entry, and but for a momentary lead, soon >everyone will be doing it. I disagree. The barriers are significant 1) Infrastructure. The ability to handle and fulfill orders from millions of customers is a significant undertaking which requires heavy capital spending (ask KTEL). EGGS has already done that. 2) Marketing. You can't just throw up a web site and expect millions of eyeballs. You have to develop a brand with repeat customers. EGGS clearly has developed the eyeballs. Now they need to work on converting those to sales, as you say. The new web site makes buying a lot easier. 3) Vendor Relationship. One of these days, the name of the game will be price, almost exclusively. Volume discounts will be required. EGGS has the volume discounts.

To: Anaxagoras who wrote (4075)	11/29/1998 1:30:00 PM
From: sam	Read Replies (1) \| Respond to of 8307

"But we went through this already- just as it's a mistake to look at PERs in isolation from eps growth, so too it's a mistake to look at PSRs in isolation from top line growth. And as I mentioned before, when comparing EGGS to other online retailers, it doesn't have the same kind of revenue growth rate, and so there's no reason why it should deserve their (IMO, silly) multiples." We did go through this already -- when determining EGGS' rev growth rate 'it's a mistake' to compare revs generated last year in stores with revs generated this year via the internet. JMHO -- for whatever its worth.

To: Anaxagoras who wrote (4075)	11/29/1998 2:44:00 PM
From: shane hartman	Read Replies (1) \| Respond to of 8307

One more thing, Anaxagoras, Yield Management. Yield management juiced airline margins and it will do the same for EGGS. The cool thing about a web site is that you can do it in real time. Analysts said Egghead was hit by falling software margins and increasing price pressures from superstores. Orban said the chain also failed to seize key opportunities, like building up a consumer computer trade-show business and opening liquidation outlets. Orban, known as a turnaround whiz in the business community, stepped in amid losses and engineered the strategy to go online. A 52-year-old former investment banker and co-founder of Ross Stores, Orban started a small office-supply chain call WorkPlace in Florida and then sold it to Staples. Orban believes Egghead can return to profitability by exploiting discounts, much like the Ross stores do, while still capitalizing on the Egghead brand to attract shoppers to the new Web site. Perhaps the ultimate test of his theory will come this month, as officials start to market the redesigned site and send the first promotional materials to a database of 7 to 10 million names. The site's first iteration won't have a lot of bells and whistles. Over time, however, Kalasky will harness the power of the back-end system by adding cross-selling and other merchandising strategies. Egghead.com will be able to track sales and efficiency of Web offers in real time. If one offer isn't generating sales, the team can switch it in hours, a process that might take days or weeks in a storefront environment.