CDNW ALERT:
We are very pleased that our EPAY hit our target and went over $30
yesterday, up from $19 when we called it. Congrats to all who held.
We are now taking a good look at CDNOW (NASDAQ: CDNW), the Internet's
number one music store. Currently trading at $16.25, CDnow is an
online retailer of CDs and other music-related products with over
250,000 different items available for purchase through its web site.
Book value is $3.59. The shares outstanding are 17.7 million. The
float is 4.1 million. As of February, short interest was 2 to 3
million. This adds the potential of true and serious short squeeze. On
October 23, 1998, CDnow, Inc. and N2K Inc. (Nasdaq: NTKI) jointly
announced the signing of a definitive merger agreement. The merger is
expected to be completed prior to March 31, 1999. Total combined net
sales would be in the neighborhood of $63.1 million. Total combined
cash would be around $114 million. It is a merger that makes a lot of
sense. As such, we expect this merger will catch the serious eye of
Wall Street and the investment community. We have been keeping our eye
on it for a while now, and Wednesday looked like the bottom. It
briefly touched the high 13s and then rebounded. Our target is a 50%
return within the next 2 to 3 weeks, in the $25 range. There is a
chance it will go much higher. The 52 week high is $39 1/4.
Regardless, the chart shows it is ready for a bounce in our opinion.
We cannot stress this enough, we lock in profits when the opportunity
presents itself. Also, we use stop limit orders to protect yourselves.
CDNW: cdnow.com
NTKI: musicblvd.com
CDnow, Inc., the Internet's number one music store, offers more than
350,000 music related items - ten times the size of the average music
store. Founded in 1994 by twin brothers Jason and Matthew Olim, CDnow
is building a better music store through intelligent album
recommendations, custom CDs, music samples, a vast library of reviews
and features from top music writers and exclusive editorial content
from Rolling Stone Network, MTV/VH1 and CMJ New Music Monthly. CDnow
is the premier online music store on Yahoo!, Lycos, Lycos-Bertelsmann,
Webcrawler, Tripod, Geocities, MTV/VH1 and Rolling Stone Network.
CDnow is an online retailer of CDs and other music-related products
with over 250,000 different items available for purchase through its
web site. For the nine months ended 9/30/98, net sales totalled $35.5
million, up from $9.5 million. Net loss totalled $30.8 million, up
from $4.1 million. Revenues reflect growth of the Company's customer
base and repeat purchases by existing customers. Higher loss reflects
increased online and traditional advertising expenses.
N2K Inc. is a leading online music e-commerce company operating Music
Boulevard and the Internet's complete resource for music content,
community and commerce. The Music Boulevard Network, combines Music
Boulevard, the world's #1 online music store and the award-winning
music channels: Rocktropolis, Jazz Central Station, Classical Insites
and the Star Sites including Stones World and the official sites for
Leonard Bernstein, Miles Davis and Wynton Marsalis. Music Boulevard
(musicblvd.com) offers a choice of more than 470,000 music titles and
over 350,000 sound samples. The Music Boulevard Network is the
preferred or exclusive music partner for America Online (AOL Keyword:
MB), AOL Japan, AOL Europe, Netscape, Excite, Disney.com, ABC.com, ABC
Radio Networks, Infoseek, Microsoft Plaza, iVillage, @Home, AT&T
WorldNet, StarMedia, MJI Broadcasting, CBS Cable's TNN, CMT and
country.com and MTV International sites in Europe, Japan, Asia and
Brazil.
N2K is an on-line music entertainment company using the internet as a
global platform for promoting, marketing and selling music and related
merchandise. For the nine months ended 9/30/98, revenues rose from
$6.5 million to $27.6 million. Net loss from continuing operations
rose from $16.7 million to $54.2 million. Revenues reflect increased
CD and cassette sales produced by others. Higher loss reflects a $4.3
million restructuring charge and the amortization of costs associated
with strategic alliances.
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