M&A Goes Bottom Fishing
Even when I called to cancel a free trial with AOL this weekend, an eager customer service representative chatted for twenty minutes on the phone talking stocks. He was anxious to ask everything he'd ever wanted to know about stocks but was afraid to ask.
But I can't blame 'em. Just look at this mess in the markets. In my spare time, I go through Internet indices to see the casualties of speculation.
I'd like to bring readers up to speed on the Net's who's-who list of walking wounded. But penning this column, I found myself saddled with an attack of the puns. So, try not to take it personally. So far Mortgage.com (MDCM) is the limbo leader at $1.62, with MotherNature.com (MTHR) hot on its heels.
Other notables include onlinetradinginc.com (LINE) . Margin call!
Drkoop.com (KOOP) . Diagnosis. Terminal.
E-Stamp (ESTM) . Return to sender.
CareerBuilder (CBDR) . Headed for the unemployment lines.
Salon.com (SALN) . Having a bad hair day.
Ilife.com (ILIF) . See drkoop.
Theglobe.com (TGLO) . Fallen off the map.
Musicmaker.com (HITS) . Ferris, Baker, Watts?
PlanetRx.com (PLRX) . "Houston, we have a problem."
Since the onset of Internet and the glut of retail investors participating in stocks, the market is accustomed to slightly different metrics than market corrections of past. When stocks build market cap overnight, it stands to reason the opposite holds true. I'm not sure if anyone's coined the term yet, but it's what I like to call a "hypercorrection."
It makes a lot of sense considering many new investors' attitude of instant gratification. The selling is more dramatic, and so should be the recovery. Like a traditional correction, techs slide amidst panic selling but do so in a condensed duration. Now, if day traders could only discover the advantages to long-term investing, outlasting a short-term correction would be a cinch.
As far as mergers and acquisitions go, some companies are taking it on the chin in these rough waters. When you use stock as currency for acquisitions, now's not a good time to carry on courtships. Today's Rolex is tomorrow's cheap gold watch. So expect the M&A front to stay cool for the time being. But, in my hypercorrection, things do turn on a dime.
This one belongs squarely in the off-topic bin, but I went house hunting over the weekend and found a dreamy bungalow straight out of Hansel and Gretel, atop a hillside. I think I'll take it, but I'm going to have to give up my coveted broadband connection and static IP address. You see, the house is too far from the phone company's call center to qualify for access. But you should see the view. Life's full of compromises.
They said it would never happen. But last week, Dutch-based grocery retailer Royal Ahold N.V. (AHO) announced plans to boost its online initiative and bail out sentimental e-grocer favorite Peapod (PPOD) . The windfall would give Peapod $73 million and a $20 million revolving line of credit.
Amidst a sea of red, Peapod was a big winner Friday, climbing $0.69 to $3.19, or nearly 30% on the day. Of course, if you rub two wooden nickels together, you still don't end up with a dime. This is great news for Peapod execs, but this company is finished as a viable investment. If you're not bottom-fishing or bargain hunting, your money is best served elsewhere. If you're married to investing in the last-mile enablers, stick with a leader like Webvan (WBVN) or Kozmo's upcoming offering.
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DealTracker scorecard: Royal Ahold/Peapod.com | |
| Investor sentiment | C |
| Terms of the deal | C- |
| Industry outlook | B- |
| Overall scorecard | C |
The big loser on the day went to E.piphany (EPNY) by a nose. The personalization and e-analytical software maker said it would acquire privately-held eClass Direct for 750,000 shares of common stock. E.piphany lost darn near half its market cap later that afternoon.
In this case, a deal that was valued at roughly $60 million found itself floundering at $35 million by lunchtime. That's like finding the man of your dreams only to find out he's got a raging case of halitosis during the goodnight kiss. But, don't expect an annulment from eClass here. It's in a crowded market of permission-based e-mail marketing ASPs, and this deal still looks pretty sweet over the long-term.
Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.
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DealTracker scorecard: E.piphany/eClass Direct | |
| Investor sentiment | F |
| Terms of the deal | C+ |
| Industry outlook | B+ |
| Overall scorecard | C |
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