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Technology Stocks : OnSale Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Brian H. who wrote (3605)	1/26/1999 4:02:00 AM
From: Doug Fowler	Respond to of 4903

Brian: You are absolutely right about OnSale. While other auctions houses like eBay and uBid were able to achieve 50 to 60 percent sequential revenue growth, OnSale, in the Christmas quarter, fell FLAT ON ITS FACE ,with something like 3 percent sequential growth. True to form, like someone who is losing the game, they decide they want to change the rules. Hey, it's the Internet after all, and any new (or old) idea is designed to confuse/shake up the market, and keep the stock price artificially inflated. You can't blame OnSale for trying to cover up its mistakes, or for even trying to inflate its stock price. Internet valuations are based largely on strong sequential growth. But when you fail miserably at sequential growth, ESPECIALLY in the Christmas quarter, as OnSale has, you deserve to get whacked HARD. OnSale avoiding getting whacked hard because "they have a new idea". While I think this idea has merit, I also believe it has a very low probability of success. I saw the CEO on CNBC, and he said he expected margins in the order of 3 to 4 percent, once OnSale got big enough and worked out all the kinks. What was unclear to me was if those were gross margins. If gross margins, and assuming this company actually achieves its stated goals, I don't see how they will ever make a dime. And, even if NET margins, this company will have to increase its sales 5-fold, to even begin to justify its current valuation. And, before I am accused by someone, I am NOT short this or any Internet stock, primarily because there is NO LOGIC guiding them, just a bunch of nouveau day traders chasing the latest fad.