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

To: Life Coach who wrote (5923)	1/16/1999 4:29:00 PM
From: Anaxagoras	Respond to of 8307

Hey Life_Coach- Very nice, lengthy article. Did I mention 'lengthy'? Sheesh!<g> Seriously, lots of good stuff in there, and I agree with most of it. One of the several things I particularly liked was their tables toward the end comparing certain companies on the basis of relevant metrics. One of those metrics is $ sales per customer, and I really wish we had this for EGGS. All you need to do is take the average number of customers and divide that into the revenue figure. Alas, EGGS hasn't broken out the starting and ending number of customers for a given quarter that I have found; all that I've found is the number of registered bidders on their auction site. :-( I also noticed that ONSL's PSR was comparable to EGGS'. You wrote: <<EGGS was offline retail, it is now on-line retail. It's a completely new company. Margins may be slim now, but the fundamentals of a strictly online retailer should improve tremendously over the next couple of years as the technology improves. >> Yes, it's relatively new (i.e. three quarters old). I would hope for margins to expand for a while, say a few years (3? 4?), but I would then expect them to contract. Remember that the basic business is still retail, and as such it will always have slim margins except for special brief periods of time when someone comes in and changes certain factors like the mode of distribution (e.g. Walmart), inventory management (e.g. Dell), JIT, etc.- then others come in and copy the model and margins contract again to a typical retail level. That is why in the year 2005 EGGS may once again trade at a significantly reduced PSR. But for the moment, I think we are in one of those "special brief periods of time" and EGGS, by going whole hog cyber, may be the leader in its niche. At least it's got a shot at it. Thanks for the discussion. :-) Anaxagoras