It seems that Internet users are buying the idea of Web auctions, helping online auctioneer uBid post financial results today that beat Wall Street expectations.
uBid, a subsidiary of Creative Computers, went public in early December and saw its stock soar in its first day of trading. The fourth-quarter financial results announced today are the first reported since its initial public offering.
Revenues for the fourth quarter ended December 31, 1998 were $24.1 million, an increase of 58 percent comapred to the third quarter of 1998. There are no meaningful figures available to compare the company's year-ago performance because its first sale was in 1997.
Losses for the fourth quarter were $1.9 million, or 24 cents per share, before the anticipated noncash charge for stock-based compensation related to the IPO. A consensus of Wall Street analysts expected uBid to post a loss of 26 cents per share, according to First Call. It should be noted, however, that only two analysts were included in this consensus, with one anticipating a loss of 28 cents and the other anticipating a loss of 24 cents.
After the noncash charge, net losses were $7.2 million, or 92 cents per share.
Although there are many online auction sites today, analysts said that the playing field is not yet overcrowded because of the difference in what the sites sell. eBay is considered more of a Web flea market, selling collectibles, whereas Onsale and uBid both sell computer equipment that is either dealer overstock or refurbished models.
uBid was spun off a little more than a year ago by Creative Computers, which sells computer hardware and software through catalogs. Creative Computers still owns 82 percent of uBid.
The company said that operating expenses increased compared to third-quarter levels, citing increased advertising expenditures and investments in infrastructure. uBid expects operating expenses to continue to increase to support brand building and infrastructure development for anticipated growth.
The company's balance sheet was greatly strengthened by the proceeds from an IPO in which it put 1.6 million shares on the market with a $15 offering price, raising $23.7 million. The company ended the year with $26.1 million in cash and equivalents.
"In our first quarter as a publicly traded company, we are pleased to report strong growth in our user base and revenues," uBid CEO Greg Jones said in a statement. Jones added that in just more than one year, uBid had pulled in revenues of $48.2 million, and built up a registered user base of 229,000--a 91-percent increase in registered users from the third quarter.
"We attribute our success to a very strong and rapid acceptance of the uBid concept," said Jones. "We saw strong growth in all of our product categories, including PCs and related products and have experienced no supply shortages."
Shares of uBid closed Friday at 70.88, and the stock has traded as high as 189 and as low as 30 since it went on the market.