The plunge of online retailing stocks by up to 50 percent from their IPO opening prices and 80 percent from their all-time highs has grabbed headlines. But the most sinister aspect of it hasn't. By every measure except sales multiple and revenue growth LVMH towers above it. Most notable are gross margins. But on the web they both sell.
Investors now care more about profitability than revenue.
On that score, the old-timers sport far better numbers. There's no end in sight to what Netco competitors would have to spend to gain the sales volume that would enable the same gross margins, not to mention profit. A closer look at last week's events reveals surprising clues. Though CMGI paid a premium of just 32 percent for uBid, it wasn't a fire sale. Even at the holiday-quarter spending rate, the company has fifteen months of cash.