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Microcap & Penny Stocks : TSIG.com TIGI (formerly TSIG) -- Ignore unavailable to you. Want to Upgrade?

To: ztect who wrote (11263)	12/8/1998 11:57:00 PM
From: David A. Irvine	Read Replies (1) \| Respond to of 44908

Z, A quicky quiz, you mean! I think CDNOW's gross margin is approximately 20% right now (i.e., their cost of goods sold is approximately 80% of sales revenue), and their operating expenses are a little over 100% of their sales (i.e., they spend a total of $1.80 for every dollar they take in). How can this company be profitable? It can't until revenues go up, which means the number of customers (or orders per customer) needs to go up (assuming their average sale stays the same). I think CDNOW management must have decided that in order to be profitable, they need to get and retain customers, hence all the advertisement and the 30% off discount. They have basically thrown away the next few years with the hope that they will be profitable in 2 or 3 years. That is quite a risk, IMO. With the nature of the internet, anything can happen in 2-3 years. Remember Amazon 2 or 3 years ago? Of course you don't! There was nothing to remember! The point is that some young upstart (TSIG?) can revamp an internet industry in a short period of time. The company that doesn't have the best mousetrap loses. Of course, you knew all that already z! Take care! -Dave