Today, Lion Inc. (LINN.OB) announced the sale of their website mortgage101.com for $5 million dollars to Internet Brands. This purchase price actually tops Lion Inc's current market cap.
In an earlier post, I had pointed out the unique value of this website, which was unfortunately trapped inside an otherwise dismal company. Mortgage101.com is the first non-sponsored search result in both Google and Yahoo when searching for the keyword "mortgage." Check it out here and here.
This purchase was an absolute bargain. While large companies like Countrywide (CFC) are spending about $35 million in mortgage related internet advertising per month, the reigning top search result for "mortgage" was just picked up for a one time pittance of $5 million.
Friday, September 28, 2007
Marchex vs. Demand Media
In the final issue of Business 2.0, Paul Sloan covers the Marchex story. In addition to providing a great history of the company and its founder, the article also mentions Open List. This is the technology that Marchex (MCHX) uses to pull together relevant content from around the web to automatically seed 100,000 different websites. I had mentioned in an earlier post that the resulting websites don't seem all that useful.
The article also brings forth a comparison of the profitability of a domain parking company and Marchex. Marchex's largest acquisition was for a portfolio of domain names that made $18 million a year of profit on $20 million of revenue. As a whole, Marchex recently made $220,000 profit on $134 million of revenue. If Marchex's development strategy does not start to yield incremental traffic and revenue, all they have done is created a domain name parking company with way too much overhead and a compromised revenue model.
A recent article in Forbes on Demand Media, presents an interesting contrast and an alternate model for development. Demand Media recently raised an additional $100 million of financing at a $1 billion dollar valuation. The company has also acquired a huge portfolio of domain names. As opposed to Marchex's strategy of thinly developing thousands of websites at once, Demand Media has been focusing on a small group of 50 highly targeted websites. They have grown the sites by adding social networking elements and real content. Visitors to the sites find engaging information and have a reason to keep coming back. As long as they can successfully replicate this model across their domain portfolio, I think they've found the winning formula.
The article also brings forth a comparison of the profitability of a domain parking company and Marchex. Marchex's largest acquisition was for a portfolio of domain names that made $18 million a year of profit on $20 million of revenue. As a whole, Marchex recently made $220,000 profit on $134 million of revenue. If Marchex's development strategy does not start to yield incremental traffic and revenue, all they have done is created a domain name parking company with way too much overhead and a compromised revenue model.
A recent article in Forbes on Demand Media, presents an interesting contrast and an alternate model for development. Demand Media recently raised an additional $100 million of financing at a $1 billion dollar valuation. The company has also acquired a huge portfolio of domain names. As opposed to Marchex's strategy of thinly developing thousands of websites at once, Demand Media has been focusing on a small group of 50 highly targeted websites. They have grown the sites by adding social networking elements and real content. Visitors to the sites find engaging information and have a reason to keep coming back. As long as they can successfully replicate this model across their domain portfolio, I think they've found the winning formula.
Tuesday, September 25, 2007
Anyone want to buy WallStreet.com?
Moniker.com released a preliminary list of domain names up for auction on October 12th at the upcoming Targeted T.R.A.F.F.I.C conference in Miami, FL.
Partial list is here. Full list available for download here.
The auction will include such financial gems as WallStreet.com and StockQuotes.com, plus some killer generic domain names like Computer.com.
The recent winner of the TechCrunch40 was a startup know by the generic domain name Mint.com. Many of the other companies presenting had made-up names that were difficult to say/spell/remember. Perhaps this is saying something towards the benefit of a strong generic domain name for a new financial website.
Partial list is here. Full list available for download here.
The auction will include such financial gems as WallStreet.com and StockQuotes.com, plus some killer generic domain names like Computer.com.
The recent winner of the TechCrunch40 was a startup know by the generic domain name Mint.com. Many of the other companies presenting had made-up names that were difficult to say/spell/remember. Perhaps this is saying something towards the benefit of a strong generic domain name for a new financial website.
Vonage- And the hits keep on coming
Vonage (VG) just can't catch a break. Today a federal jury ruled that Vonage infringed on 6 of Sprint's (S) patents. The ruling, which Vonage just announced they will appeal, awards Sprint $69.5 million in damages and will also require Vonage to pay a 5% royalty on future revenues. Vonage shares were recently hitting a fresh all time low on the news.
The recent headway Vonage has managed to make cutting marketing expenses and reducing operating costs have been over shadowed by the continuing patent and legal problems.
Vonage previously lost a patent infringement case against Verizon and is currently in the midst of a lawsuit by defunct former rival Sunrocket.
The Vonage story used to be about growth. Now it looks like the only story they have left to sell is survival. At the close of the second quarter, they had about $280 million in cash left. At their current burn rate of $50 million per quarter and after paying today's damage, they have a little over a year left.
The recent headway Vonage has managed to make cutting marketing expenses and reducing operating costs have been over shadowed by the continuing patent and legal problems.
Vonage previously lost a patent infringement case against Verizon and is currently in the midst of a lawsuit by defunct former rival Sunrocket.
The Vonage story used to be about growth. Now it looks like the only story they have left to sell is survival. At the close of the second quarter, they had about $280 million in cash left. At their current burn rate of $50 million per quarter and after paying today's damage, they have a little over a year left.
Friday, September 21, 2007
Earthlink passes the Helio buck
Today Earthlink (ELNK) confirmed that its Helio joint venture partner SK Telekom would be funding up to $270 million of additional investment. In the press release, Earthlink CEO Roll Huff also explained that this would allow Helio to move forward "without the need for further investment by Earthlink."
Up until now, both companies have had an equal share of Helio at 48% each. This was based on initial investments of $220 million each. The changes in ownership percentages following SK Telekom's additional investment have not been determined yet.
New CEO Rolla Huff has been taking steps to get Earthlink back on track. His first moves were to cut jobs and back away from Earthlink's municipal wifi projects. It was speculated that he may also try to sell their stake in money losing Helio.
Based on today's news it seems that Earthlink will retain their existing ownership in Helio, but stick SK Telekom with the burden of funding any additional investments necessary to keep Helio going.
Helio currently has 120,000 subscribers. They are expecting a full year 2007 net loss of between $330 and $360 million.
Up until now, both companies have had an equal share of Helio at 48% each. This was based on initial investments of $220 million each. The changes in ownership percentages following SK Telekom's additional investment have not been determined yet.
New CEO Rolla Huff has been taking steps to get Earthlink back on track. His first moves were to cut jobs and back away from Earthlink's municipal wifi projects. It was speculated that he may also try to sell their stake in money losing Helio.
Based on today's news it seems that Earthlink will retain their existing ownership in Helio, but stick SK Telekom with the burden of funding any additional investments necessary to keep Helio going.
Helio currently has 120,000 subscribers. They are expecting a full year 2007 net loss of between $330 and $360 million.
Thursday, September 20, 2007
Peet's Coffee finally starting to perk
Shares of Peet's Coffee (PEET) have shown some recent life, today closing just below $28. This puts the stock within striking range of its 52 week high of $29.17. This is an interesting contrast to coffee rival Starbucks (SBUX), whose shares have been dribbling close to their 52 week low.
Peet's was the originator of the specialty coffee concept in 1966 with the first store opened by founder Alfred Peet. Interestingly, he later played an advisory role in the early days of Starbucks.
Peet's has been delivering steady 20% revenue growth since their IPO in January 2001. In recent quarters, their profit growth has been flat or down on higher costs associated with milk, coffee, and new store openings.
Peet's has kept up the growth in part by opening new retail stores. Another 30 stores are expected to be opened by year end. Peet's has also expanded by distributing their coffee to grocery stores. In fact, this has been their fastest growing sales channel. By year end, they expect to add distribution to at least 1,000 new grocery customers, predominantly in the east.
Peet's has been steadily building their brand and their presence. While their retail store base is predominantly in California, their grocery store distribution channel has brought their coffee to the rest of the nation. When Peet's is ready to expand their retail presence nationally, they will have an established base of customer to build on. While Starbucks has already saturated the country, Peet's is ready to grow and looks poised to do so.
One more thing I would be remiss not to mention. Peet's owns the domain name coffee.com. How cool is that?
Disclosure: I am long PEET
Peet's was the originator of the specialty coffee concept in 1966 with the first store opened by founder Alfred Peet. Interestingly, he later played an advisory role in the early days of Starbucks.
Peet's has been delivering steady 20% revenue growth since their IPO in January 2001. In recent quarters, their profit growth has been flat or down on higher costs associated with milk, coffee, and new store openings.
Peet's has kept up the growth in part by opening new retail stores. Another 30 stores are expected to be opened by year end. Peet's has also expanded by distributing their coffee to grocery stores. In fact, this has been their fastest growing sales channel. By year end, they expect to add distribution to at least 1,000 new grocery customers, predominantly in the east.
Peet's has been steadily building their brand and their presence. While their retail store base is predominantly in California, their grocery store distribution channel has brought their coffee to the rest of the nation. When Peet's is ready to expand their retail presence nationally, they will have an established base of customer to build on. While Starbucks has already saturated the country, Peet's is ready to grow and looks poised to do so.
One more thing I would be remiss not to mention. Peet's owns the domain name coffee.com. How cool is that?
Disclosure: I am long PEET
Tuesday, September 18, 2007
BusinessWeek leads a cheer for Ebay
Sellers are finding more efficient or cheaper ways to make their sales. Buyers are finding easier or more exciting places to make their purchases. These two factors have been contributing to a slow, downward spiral for Ebay's core auction business. Once thought merely saturated, it's now a market threatening to cross over into decline.
Ebay (EBAY) has been making a play for increased listings from sellers through promotions, and now they are shifting to buyers with updated site features. Instead of continuously, incrementally improving over the past decade, Ebay thinks that they can fix everything, all at once, right now. Business Week seems convinced that it will work.
About two and a half years ago when problems were first becoming evident, Ebay's stock took a sharp dive, falling more than 40%. When questioned about this during the annual shareholder's meeting, CEO Meg Whitman brushed aside concerns about the stock price with this classic quote:
"We're bullish about the long term for the company," Whitman said. "Is the stock market efficient day to day, week to week? Probably not."
Ebay's stock price has still not made up for the lost ground, and Meg has sold plenty of shares since then, even recently.
So Meg: Is the stock market not efficient year to year either? Or are the recent changes, too little, too late?
Ebay (EBAY) has been making a play for increased listings from sellers through promotions, and now they are shifting to buyers with updated site features. Instead of continuously, incrementally improving over the past decade, Ebay thinks that they can fix everything, all at once, right now. Business Week seems convinced that it will work.
About two and a half years ago when problems were first becoming evident, Ebay's stock took a sharp dive, falling more than 40%. When questioned about this during the annual shareholder's meeting, CEO Meg Whitman brushed aside concerns about the stock price with this classic quote:
"We're bullish about the long term for the company," Whitman said. "Is the stock market efficient day to day, week to week? Probably not."
Ebay's stock price has still not made up for the lost ground, and Meg has sold plenty of shares since then, even recently.
So Meg: Is the stock market not efficient year to year either? Or are the recent changes, too little, too late?
Monday, September 17, 2007
The mortgage shakeout
The shakeout
The mortgage headlines have been rolling in over the past few weeks. Not just headlines about the crisis/meltdown/chaos, but also the headlines about exiting the mortgage business and cutting mortgage jobs.
Companies that previously diversified into mortgages are significantly scaling back or completely closing their mortgage units.
Mortgage companies that fueled growth by expanding the pool of eligible customers through loosening standards or embracing higher risk programs are reeling in standards and eliminating programs.
Some mortgage companies have just gone bankrupt or thew in the towel.
Where it's going
People are waking up to the fact that the easy money generated by mortgage business has repercussions and risks in the light of day.
After the shakeout, there will be fewer firms chasing fewer loans of higher quality.
What's next
Companies who decided to diversify into mortgages or expand mortgage operations during the boom will have an earnings hang over. As long as the mortgage operations were ancillary to other profitable financial operations, the companies will simply take the write downs, exit and restructuring charges, and move on.
Most established companies who expanded wildly through the boom will sober up. They continue to re-evaluate and adjust lending programs, right size their organizations, rediscover conservatism, and try to once again find the correct pace of moderate predictable growth.
A few more newer mortgage companies and perhaps one or two established companies will disappear. Bad loans will come home to roost, companies who grew up during the boom won't find a way to adjust and remain profitable during the lean times, investors will flee, and lawsuits will follow.
Years from now
Some mostly unknown company will emerge and redefine the mortgage business. This company will have learned the lessons from the past and start to act boldly and confidently in a space that others have left for dead. Investors will be suspicious. High quality earnings and rational growth will ensue. Early investors will start to pay attention and start putting new money in an old place again.
The mortgage headlines have been rolling in over the past few weeks. Not just headlines about the crisis/meltdown/chaos, but also the headlines about exiting the mortgage business and cutting mortgage jobs.
Companies that previously diversified into mortgages are significantly scaling back or completely closing their mortgage units.
Mortgage companies that fueled growth by expanding the pool of eligible customers through loosening standards or embracing higher risk programs are reeling in standards and eliminating programs.
Some mortgage companies have just gone bankrupt or thew in the towel.
Where it's going
People are waking up to the fact that the easy money generated by mortgage business has repercussions and risks in the light of day.
After the shakeout, there will be fewer firms chasing fewer loans of higher quality.
What's next
Companies who decided to diversify into mortgages or expand mortgage operations during the boom will have an earnings hang over. As long as the mortgage operations were ancillary to other profitable financial operations, the companies will simply take the write downs, exit and restructuring charges, and move on.
Most established companies who expanded wildly through the boom will sober up. They continue to re-evaluate and adjust lending programs, right size their organizations, rediscover conservatism, and try to once again find the correct pace of moderate predictable growth.
A few more newer mortgage companies and perhaps one or two established companies will disappear. Bad loans will come home to roost, companies who grew up during the boom won't find a way to adjust and remain profitable during the lean times, investors will flee, and lawsuits will follow.
Years from now
Some mostly unknown company will emerge and redefine the mortgage business. This company will have learned the lessons from the past and start to act boldly and confidently in a space that others have left for dead. Investors will be suspicious. High quality earnings and rational growth will ensue. Early investors will start to pay attention and start putting new money in an old place again.
Tucows - updates since last earnings release
In early August, Tucows (TCX) dropped sharply following their second quarter earnings release. Tucows's decline was joined by other domain related stocks which also logged double digit percentage declines in August.
Since second quarter earnings, the company has been relatively quiet with a few notable items:
Tucows appointed Bill Sweetman as General Manager of its domain name portfolio. In his role, he will be dedicated to improving the quality and profitability of the Tucows domain portfolio. This can be viewed as a positive step towards more effectively monetizing their domain assets.
On September 14, Tucows CEO Elliot Noss purchased 20,000 shares of TCX on the open market at $1.05 per share. Over the years, he has been a steady buyer of Tucows shares and the most recent purchase shows a vote of confidence in the company's long term prospects.
In other ongoing developments:
Tucows had acquired wholesale domain registrar ItsYourDomain.com (IYD) in late July. IYD had roughly 700,000 domains under management and offers services through a network of over 2,500 affiliates. There have been no updates on the integration, but at the time it was expected to add approximately $7 million in yearly revenue and $1- $2 million in adjusted net income in the first 12 months.
Tucows had announced a reduction in their wholesale pricing. This has been implemented and extended to .mobi and .name domain names.
With the third quarter drawing to a close, it's difficult to difficult to determine how the acquisition, the price decrease, and other possible nonrecurring items such as domain name sales might affect results. However, in the second quarter earnings release, Tucows had reiterated their expectation for $10 million in operating cash flow for 2007. The year to date operating cash flow at June 30 was $3.5 million. This leaves at least $6.5 million of operating cash flow for the remaining two quarters.
Trading volume has declined since the drop and the stock price has stabilized in a range slightly below the $1.00 mark.
Disclosure: I am long TCX
Since second quarter earnings, the company has been relatively quiet with a few notable items:
Tucows appointed Bill Sweetman as General Manager of its domain name portfolio. In his role, he will be dedicated to improving the quality and profitability of the Tucows domain portfolio. This can be viewed as a positive step towards more effectively monetizing their domain assets.
On September 14, Tucows CEO Elliot Noss purchased 20,000 shares of TCX on the open market at $1.05 per share. Over the years, he has been a steady buyer of Tucows shares and the most recent purchase shows a vote of confidence in the company's long term prospects.
In other ongoing developments:
Tucows had acquired wholesale domain registrar ItsYourDomain.com (IYD) in late July. IYD had roughly 700,000 domains under management and offers services through a network of over 2,500 affiliates. There have been no updates on the integration, but at the time it was expected to add approximately $7 million in yearly revenue and $1- $2 million in adjusted net income in the first 12 months.
Tucows had announced a reduction in their wholesale pricing. This has been implemented and extended to .mobi and .name domain names.
With the third quarter drawing to a close, it's difficult to difficult to determine how the acquisition, the price decrease, and other possible nonrecurring items such as domain name sales might affect results. However, in the second quarter earnings release, Tucows had reiterated their expectation for $10 million in operating cash flow for 2007. The year to date operating cash flow at June 30 was $3.5 million. This leaves at least $6.5 million of operating cash flow for the remaining two quarters.
Trading volume has declined since the drop and the stock price has stabilized in a range slightly below the $1.00 mark.
Disclosure: I am long TCX
Thursday, September 13, 2007
Bank of America raises fees due to Countrywide- what?
Today Bank of America (BAC) announced that they would raise their ATM fee for noncustomers from $2 to $3 per transaction.
Dealscape goes out on a limb and contemplates whether the ATM fee increase was imposed to cushion earnings against potential losses on their Countrywide (CFC) investment.
ok... what?
Anyone else see absolutely no connection between these events?
In other news, Countrywide secured another $12 billion from their credit lines. This brings the total emergency liquidity funding number to $25.5 billion.
Countrywide shares rallied on the news, sending Bank of America's investment back into the green. I guess we will have to wait and see if BofA cancels the ATM fee increase.
Dealscape goes out on a limb and contemplates whether the ATM fee increase was imposed to cushion earnings against potential losses on their Countrywide (CFC) investment.
ok... what?
Anyone else see absolutely no connection between these events?
In other news, Countrywide secured another $12 billion from their credit lines. This brings the total emergency liquidity funding number to $25.5 billion.
Countrywide shares rallied on the news, sending Bank of America's investment back into the green. I guess we will have to wait and see if BofA cancels the ATM fee increase.
Countrywide and the internet advertising shoe
Today Countrywide (CFC) disclosed that their loan fundings declined by 17% in August. This came amidst a retrenching in its overall lending business, as they tightened standards and outlined plans to lay off 20% of its work force. However, as yet they have not apparently retrenched their internet advertising efforts.
Over the past few months, there have been rumblings on the internet that the subprime/lending/housing situation would eventually spill over into online advertising. August data still shows otherwise.
Notably, Countrywide's internet advertising spend for August still showed a consecutive month increase from $34.8 million to $35.4 million.
Over the past few months, there have been rumblings on the internet that the subprime/lending/housing situation would eventually spill over into online advertising. August data still shows otherwise.
Notably, Countrywide's internet advertising spend for August still showed a consecutive month increase from $34.8 million to $35.4 million.
Wednesday, September 12, 2007
Silicon Alley Insider vs. Valleywag
The same day venture capitalist Fred Wilson from A VC gave an approving nod to new investment blog Silicon Alley Insider, Vallywag takes a shot at them calling their iPhone anlysis assumptions absurd.
Rivalry brewing?
Rivalry brewing?
Local.com meet LocalSearch.com
Idearc Inc. (IAR) owner of Internet Yellow Pages service superpages.com today announced the acquisition of the domain name localsearch.com for $3.3 million. They will also make an unspecified strategic investment in the former owner of the domain name AmericanTowns.com.
Idearc mentions in the press release that they will use the new domain name to provide a rich, useful content experience in the local search space... I guess, as opposed to the current experience at superpages.com.
Depending on how the domain name is eventually branded, this may also cause some interesting confusion with competitor Local.com's (LOCM) local search portal. Local.com had previously paid $700,000 for their domain name.
Idearc mentions in the press release that they will use the new domain name to provide a rich, useful content experience in the local search space... I guess, as opposed to the current experience at superpages.com.
Depending on how the domain name is eventually branded, this may also cause some interesting confusion with competitor Local.com's (LOCM) local search portal. Local.com had previously paid $700,000 for their domain name.
Tuesday, September 11, 2007
AT&T - Chilondoscow anyone?
AT&T (T) seems to be doing a good job setting themselves up for internet jokes lately.
First there was the YouTube video showing someone opening their 300 page iPhone bill.
Then there were the stories of the $3,000 and $4,000 iPhone bills.
And now, another re-branding touting the fact that AT&T will work in Chilondoscow.
Sigh....
Anyone else miss Ed?
First there was the YouTube video showing someone opening their 300 page iPhone bill.
Then there were the stories of the $3,000 and $4,000 iPhone bills.
And now, another re-branding touting the fact that AT&T will work in Chilondoscow.
Sigh....
Anyone else miss Ed?
Countrywide - $13.5 Billion is not enough
Countrywide (CFC) is reportedly seeking another investment.
In mid-August, the company had tapped its credit lines for $11.5 billion. Less than a week later, they announced a $2 billion dollar investment from Bank of America (BAC).
These developments have not been very comforting to their two largest investors, who recently significantly reduced their stakes. It also can't be very comforting for their customers, who may be perpetuating the liquidity problems by pulling their deposits.
If Countrywide does get another investment, Bank of America will get the booby prize of pre-emptive rights and anti-dilution adjustments. Perhaps fortunately, they are restricted by the terms of their investment from acquiring additional ownership outside of the adjustments.
In mid-August, the company had tapped its credit lines for $11.5 billion. Less than a week later, they announced a $2 billion dollar investment from Bank of America (BAC).
These developments have not been very comforting to their two largest investors, who recently significantly reduced their stakes. It also can't be very comforting for their customers, who may be perpetuating the liquidity problems by pulling their deposits.
If Countrywide does get another investment, Bank of America will get the booby prize of pre-emptive rights and anti-dilution adjustments. Perhaps fortunately, they are restricted by the terms of their investment from acquiring additional ownership outside of the adjustments.
Ebay - Free Listings are the new Free Shipping?
A few research notes were released today with positive data about Ebay's (EBAY) third quarter listings. Here's a nice chart.
Over the past month, Ebay has unleashed a number of unprecedented promotions in an attempt to boost their sagging auction listings numbers. For the moment these promotions are working, but Ebay may be setting a dangerous path.
Years ago, Amazon held periodic Free Shipping promotions around the holidays. Personally, I accelerated and decelerated the pace of my orders in order to qualify for the free shipping. If there wasn't a free shipping promotion going on, I was less inclined to order and vice versa. Amazon started making it easier to qualify for free shipping by lowering the minimum order to $25 and eventually made the free shipping offer a permanent feature. Now I completely expect that my shipping will be free and it has no impact on my orders.
While the promotions might be giving Ebay a temporary boost, sellers may eventually take the free listings for granted and come to expect it. If Ebay stops the promotion, they can expect a steep drop in listings, which might be more punishing than the drop they were trying to avoid. If Ebay keeps the promotion going, the promotional effect will diminish and Ebay will start running out of ammo to boost other lackluster quarters.
Instead of trying to determine and address the real reasons behind their listings problem, Ebay has chosen to paper over sagging numbers with temporary promotions. It will be a slippery slope if they try to keep it up.
Over the past month, Ebay has unleashed a number of unprecedented promotions in an attempt to boost their sagging auction listings numbers. For the moment these promotions are working, but Ebay may be setting a dangerous path.
Years ago, Amazon held periodic Free Shipping promotions around the holidays. Personally, I accelerated and decelerated the pace of my orders in order to qualify for the free shipping. If there wasn't a free shipping promotion going on, I was less inclined to order and vice versa. Amazon started making it easier to qualify for free shipping by lowering the minimum order to $25 and eventually made the free shipping offer a permanent feature. Now I completely expect that my shipping will be free and it has no impact on my orders.
While the promotions might be giving Ebay a temporary boost, sellers may eventually take the free listings for granted and come to expect it. If Ebay stops the promotion, they can expect a steep drop in listings, which might be more punishing than the drop they were trying to avoid. If Ebay keeps the promotion going, the promotional effect will diminish and Ebay will start running out of ammo to boost other lackluster quarters.
Instead of trying to determine and address the real reasons behind their listings problem, Ebay has chosen to paper over sagging numbers with temporary promotions. It will be a slippery slope if they try to keep it up.
Friday, September 7, 2007
Verisign- Adventures in domain land
Today Verisign (VRSN) acts as the registry operator for .com and .net domain names. At other points in the company's history, they have also been a domain registrar and a platform for secondary domain name sales. Verisign bought their way into the latter two businesses, only to sell out for a fraction of the price.
March 2000 - Verisign purchases Network Solutions for $21 Billion.
October 2003 - Verisign sells Network Solutions for $100 Million.
Notably, the sale of Network Solutions was for the registrar business only. Verisign retained control of the registry business. The buyer turned Network Solutions from a fading registrar, into a profitable seller of multiple value added web services. In February 2007, the company was resold for an estimated $800 Million.
November 2000 - Verisign purchases GreatDomains.com for $100 Million.
June 2007 - Verisign sells GreatDomains.com for roughly $2 Million.
The buyer was Sedo.com, a global market for domain name sales. They changed the format of GreatDomains.com into an auction venu for high value domain names. Their first auction sold over $1 million worth of domain names.
Verisign, perhaps regretful of their continued failure to capitalize on the boom in domain names, will soon implement a 7% annual price increase for registry fee that they still receive as the central registry for dot com domain names. This registry fee actually makes up the bulk of cost of a domain registration. The price increase is effective this October.
March 2000 - Verisign purchases Network Solutions for $21 Billion.
October 2003 - Verisign sells Network Solutions for $100 Million.
Notably, the sale of Network Solutions was for the registrar business only. Verisign retained control of the registry business. The buyer turned Network Solutions from a fading registrar, into a profitable seller of multiple value added web services. In February 2007, the company was resold for an estimated $800 Million.
November 2000 - Verisign purchases GreatDomains.com for $100 Million.
June 2007 - Verisign sells GreatDomains.com for roughly $2 Million.
The buyer was Sedo.com, a global market for domain name sales. They changed the format of GreatDomains.com into an auction venu for high value domain names. Their first auction sold over $1 million worth of domain names.
Verisign, perhaps regretful of their continued failure to capitalize on the boom in domain names, will soon implement a 7% annual price increase for registry fee that they still receive as the central registry for dot com domain names. This registry fee actually makes up the bulk of cost of a domain registration. The price increase is effective this October.
Indymac's ex-dividend
Today, troubled thift bank/mortgage lender IndyMac's (IMB) CEO recommended that the company cut its dividend by 50%.
When the company declared the dividend last quarter, they included this statement:
"It remains an important goal for Indymac to preserve the current common dividend through this down cycle for our industry, although there can be no absolute assurance we can meet this goal if conditions deteriorate."
So in other words, things are continuing to deteriorate. Here was today's statement:
"At this level, I believe that our dividend payout will be at a more normal ratio to earnings for a
thrift. I also believe that we will be able to sustain this level of dividend payout through the current down cycle for the mortgage and housing markets, which is presently forecasted to worsen before it gets better."
Around the corner, Bank of America's (BAC) $2 billion dollar investment in Countrywide (CFC) was dipping into the red as the price fell below $18 this morning. When the investment was announced shares of Countrywide had briefly spiked above $24.
When the company declared the dividend last quarter, they included this statement:
"It remains an important goal for Indymac to preserve the current common dividend through this down cycle for our industry, although there can be no absolute assurance we can meet this goal if conditions deteriorate."
So in other words, things are continuing to deteriorate. Here was today's statement:
"At this level, I believe that our dividend payout will be at a more normal ratio to earnings for a
thrift. I also believe that we will be able to sustain this level of dividend payout through the current down cycle for the mortgage and housing markets, which is presently forecasted to worsen before it gets better."
Around the corner, Bank of America's (BAC) $2 billion dollar investment in Countrywide (CFC) was dipping into the red as the price fell below $18 this morning. When the investment was announced shares of Countrywide had briefly spiked above $24.
Wednesday, September 5, 2007
B&G Foods- Sells pickels, buys brands, pays dividends
B&G Foods (BGS) is best know for B&G pickles, but their stable of brands also includes B&M baked beans, Ortega, Cream of Wheat, plus about a dozen more. Several of their brands are so-called "orphaned" brands which were acquired from larger companies. Their most recent acquisition was Cream of Wheat from Kraft Foods for $200 million cash.
The stock yields a curiously large 6.5% dividend based on today's price. While an abnormally large dividend is sometimes cause for concern, in this case it seems to be the result of previously issued enhanced income securities (EIS). In 2004, the company sold EIS units which were part bond and part common stock. These units were intended to pay out most of the company's spare cash as interest and dividends. The EIS units still trade under the symbol BGF. The BGS common shares have continued to the pay same dividend yield historically paid for the stock component of the BGF units.
B&G has been able to attain better than average growth rates. Part of the reason for this has been the additional revenue generated by acquisitions. However even without acquisition related revenues the company has still been growing at 3% to 6% as they breathe new life into old brands. B&G also has attained better than average margins. Many of their products are considered "premium" or hold number one or number two positions in their respective segments.
The company is run by a long standing management team, who have proven experience with purchasing and resuscitating orphaned brands. There have also been a recent bout of insider purchases.
On the down side, the company does have a very large debt burden as a result of the two most recent brand acquisitions. Long term debt is over $500 million. The company does generate sufficient operating cash flow to cover the interest plus the current dividend, but not by a wide margin. This may inhibit their ability to acquire new brands if the opportunity arises.
On the balance, I think the company presents a good buying opportunity. If not the stock, then at least the pickles.
Disclosure: I am long BGS
The stock yields a curiously large 6.5% dividend based on today's price. While an abnormally large dividend is sometimes cause for concern, in this case it seems to be the result of previously issued enhanced income securities (EIS). In 2004, the company sold EIS units which were part bond and part common stock. These units were intended to pay out most of the company's spare cash as interest and dividends. The EIS units still trade under the symbol BGF. The BGS common shares have continued to the pay same dividend yield historically paid for the stock component of the BGF units.
B&G has been able to attain better than average growth rates. Part of the reason for this has been the additional revenue generated by acquisitions. However even without acquisition related revenues the company has still been growing at 3% to 6% as they breathe new life into old brands. B&G also has attained better than average margins. Many of their products are considered "premium" or hold number one or number two positions in their respective segments.
The company is run by a long standing management team, who have proven experience with purchasing and resuscitating orphaned brands. There have also been a recent bout of insider purchases.
On the down side, the company does have a very large debt burden as a result of the two most recent brand acquisitions. Long term debt is over $500 million. The company does generate sufficient operating cash flow to cover the interest plus the current dividend, but not by a wide margin. This may inhibit their ability to acquire new brands if the opportunity arises.
On the balance, I think the company presents a good buying opportunity. If not the stock, then at least the pickles.
Disclosure: I am long BGS
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