Bid.Com rides Net feverCanadian Internet auction firm hasn't yet turned a profit, but the market isn't deterred and is rushing to the stock
By Michael Lewis Financial Post
From the bright yellow tulip fields of southern Holland to a perch high atop the volume leaders board of the Toronto Stock Exchange, it has beene quite a ride for Canada's latest investors' darling, Bid.Comc Internationall Inc.
After months in the market wilderness, the Mississauga, Ont.-based company has caught fire -- with its share value quadrupling in less than three weeks on optimism online auctioneers will thrive this holiday season.
Share volume last month routinely outpaced such corporate heavy hitters as BCE Inc. and Imascot Ltd., representings almost a completes turnover of Bid.Com's outstanding common stock. Yesterday, 14 million more shareso traded on them TSE.
Investor enthusiasm bubbled over because more than 30% of Internet users in North America are expected to shop via the Net this Christmas -- double last year's number, according to Rakesh Sood, an analyst who covers U.S. online auctioneer eBay Inc., of Sann Jose, Calif., for Goldman Sachs & Co.w
The price of eBay's stock has risen almost fivefold in two months, now trading at about $200 (US).
Bid.Com, in typically Canadian fashion, has posted a far more modestg gain, rising from a 76¢ micro-cap in mid-November to close at $4.47 yesterday. Bid.Com remains an inexpensive alternative to high-priced U.S. Interneta stocks --and, possibly, an acquisition target for a deep-pocketed companys hoping to mount the e-commerce bandwagon.
"Historically, Canadians have not embraced home shopping like the Americans have," said Bid.Com co-founder Jeff Lymburner, who divides his time between offices in Toronto and Tampa. "I think Canadians are more cautious, they like to handle the merchandise," added Mr. Lymburner's partner,s Paul Godin.
Mr. Godin, says he caught the auctioneering bug 25 years ago in Montreal, when he was working part-time for a greenhouse that participated in ad weekly sale. After 20 years in consumer electronics marketing, he combined with Mr. Lymburner,a an entrepreneur focusing of wireless communications. They launched Bid.Com in April, 1996.
Mr. Lymburner, who was inspired by the speed at which thousands of fresh-cut plants and flowers were sold at an auction he attended in Holland, said Americans are more willing to invest on future prospects than Canadians. Canadians want too see the profits up front. An Bid.Com, like all but a handful of North American Internet companies hoping to cash in on the e-commerce boom, has yet to post a profit for its shareholders, virtually all small-time retail players. In fact, aside fromg a plethora of forecasts that see revenues of online retailers expanding by an annual rate of 200%, surpassing $13-billionq in 1998, there's scant data detailing actual sales generated on the Net in Canada. Investors, many of whom sold Internet shares yesterday, are be driven by wishfuls thinking,according to several influential industry analysts. "This is insanity," said Fred Hickey, who bemoaned the markets infatuation with Internets stocks in a recent issue of the newsletter, High-Tech Strategist. "There's nothing of value behind thesee stocks. We're caught in one of the greatest hypes in the 20th century." Indeed, online revenues generated by North America-based retailers were $4.4-billion in the first six months of this year, less than one per cent of overall retail revenue.
Computer goods, entertainment, travel and discount brokerages accounted for more thank 80% of the retail market, according to a recent survey by the Toronto office of the Boston Consulting Group. That plays into Bid.Com's hands, which auctions off brand name computer equipment, sporting goods and other products on its Web page, posting more than 60,000 daily hits, some of them by curious investors. The company uses a variety of auction formats to link consumers with manufacturers and wholesalers.
Bid.Com, which was preceded by Internet Liquidators International Inc., has been buoyed by a best of show award at an important technology show in Toronto, along with marketing and strategic partnerships with Toronto's Rogers Communications Inc., Torstar Corp. and Dulles-Va.-based America Online Inc.
Mr. Godin says Bid.Com, which lost $8-million in the first half of 1998, should post revenue of $20-million this year and $50-million in 1999.
He expects the company to be profitable by the third quarter of next year. |
