THE DAY AHEAD: UPS a back-door e-commerce stock

As Webvan (Nasdaq: WBVN), Amazon.com (Nasdaq: AMZN) and every other e-tailer on the planet is playing the "my planned distribution center is bigger than yours" game, here's a simple solution to cut through the warehouse rhetoric: Buy shares of United Parcel Services (NYSE: UPS), which prices Tuesday night for trading Wednesday.

The company is offering a whopping 109.4 million shares with a price range of $47 to $49 a share in what should be the largest U.S. IPO ever. The number of shares may limit the first day pop, but that doesn't mean UPS isn't a back-door e-commerce play. Morgan Stanley Dean Witter is the lead underwriter with an assist from Goldman Sachs and a host of other firms.

UPS: An e-commerce stock?

Why trade in an e-tailing stock for UPS? Listen to any e-tailing official (perhaps Amazon's Jeff Bezos later today) and you'll find they all have UPS envy. Chances are good that you'll hear how e-tailers need to build state-of-the-art distribution to conquer that last mile to the consumer. These e-tailers, which are losing gobs of money, need trucks, conveyor belts, inventory management and big facilities.

Good, old UPS has all that infrastructure and Zona Research estimated that UPS delivered 55 percent of the goods purchased over the Internet in 1998.

"At the end of the day UPS is the only way we're seeing anything on our door from the Internet ," said William Schaff, fund manager for the Information Technology 100 Fund. "It will be everybody's safe proxy for e-commerce."

Why even bother with e-tailers that are bound to screw up their distribution expansion? Take the shortcut.

And UPS is as Web savvy and as efficient as any e-tailer could hope to be. You can easily track your items on www.ups.com and get a status report. The company collects electronic data on 7.5 million packages each day and has become increasingly more efficient.

All that e-commerce talk will make the UPS offering one of the hottest of the week.

In its regulatory filings UPS makes its e-commerce intentions clear: "We seek to position ourselves as an indispensable branded component of e-commerce and to focus on the movement of goods, information and funds," said UPS. "E-commerce is an important part of our future growth because we believe that it will drive smaller and more frequent shipments and provide a strong complement to our core delivery service."

UPS backs up its tech talk with plans to leverage tech partnerships for enterprise resource planning, electronic procurement and systems integration. UPS plans to work with various e-commerce sites to help operate just-in-time or manufacturer-direct distribution business models.

But there is a big difference between UPS and other e-commerce companies -- profits. For the nine months ending June 30, UPS reported revenue of $19.6 billion and net income of $222 million including charges. For 1998, UPS reported sales of $24.8 billion and net income of $1.7 billion.