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Cyberian Outpost Inc. (NASDAQ: COOL)
Cyberian Outpost Inc.
27 North Main Street Kent 06757
President and CEO: Darryl Peck
Revenues (YE ear ending February 28, 1998): $22.7 million
Net loss (fiscal year ending February 28, 1998): ($7.1 million)
Employees: 140
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Business New Haven
2/8/1999
By: BNH
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What to you do when you need to buy something - go to a store? Mail order? What if it's frozen solid outside? Get in the dog sled and mush?
Not in 1999. You needn't to go to the frozen fringes of the planet to find cool addresses to fill your shopping needs. Today, buying merchandise has become easier with many opportunities from shopping at malls, via catalogues or television shopping programs.
More recently, “e-tailing” has evolved into a popular way to find merchandise by allowing consumers to access shopping via Internet sites. Many companies use e-tailing in addition to their retail stores or catalogue offerings while other's, such as Cyberian Outpost Inc. (outpost.com) sell exclusively via the Internet.
Since 1995, Cyberian has been building its business of supplying computer products - including software and hardware - to customers around the world by offering around-the-clock shopping each day.
Cyberian is breaking the ice with customers by introducing them to its site and then turning them into buyers - especially repeat buyers. (For the latest quarter ended November 30, 1998, 53 percent of sales were generated from repeat customers.)
The 1998 Thanksgiving weekend sales order count grew by nine times when compared to the prior year's holiday weekend. The company reached a landmark on November 30, 1998 with its first single day in which sales volume exceeded $1 million. Compare this to their February 1998 first million-dollar week and their November 1996 first million-dollar month.
To increase brand awareness, the company initiated a massive advertising campaign during November with the assistance of Cliff Freeman & Partners of New York. In the following month, Cyberian signed an agreement with Discover Card that allowed it to use Discover Card's spot on a One Times Square sign to advertise messages from mid-December to mid-January 1999. Also, Discover ShopCenter features outpost.com as one of its merchants and offers promotions and savings to Discover Card members for shopping at the Cyberian site.
There is a blizzard of shopping addresses on the Internet, and through the company's many partnerships including with Time Warner, AOL and Excite, among others, Cyberian has plowed a path for new customers to arrive at its site. In November, the company, along with eToys, Reel.com and CDnow launched ShopperConnection.com, which provides a network of online services and retailers.
Cyberian has been aggressive in increasing its international accessibility and offers shopping opportunities translated into more than nine languages. In December the company signed a one-year partnership agreement with Scandinavian Online (SOL) whereby it became SOL's exclusive computer products retailer for SOL's Internet sites in Denmark, Norway and Sweden and, in the future, Finland.
Access to the European market was previously enhanced by its agreement with Lycos-Bertelsmann in Germany. The company penetrated the Latin American market with an agreement with StarMedia to become its premier reseller of computer products for this major online network in Latin America. Presently 15 percent of the company's sales are in the international market.
Cyberian has worked to grow its customer base, name recognition and revenues both in the domestic and international marketplace. By December the company had 210,000 customers in more than 150 countries. For the nine months ended November 30, revenues increased 257 percent to $52.1 million from $14.6 million for the 1997 period. For the third quarter ending November 30, net sales increased 286 percent to $23.5 million from $6.1 million for the third quarter ended November 30, 1997. This quarter's sales exceeded the entire annual sales of $22.7 million for the year ended February 28, 1998.
Cyberian became a public company last July 31 with an IPO which generated proceeds of $72 million. Trading in the $10 to $20 range after the IPO, the stock jumped to almost $40 late in the year. Today it is trading in the $25 range, closing at 25 on January 28. In a recent announcement, the Pacific Exchange stated that it would commence trading Cyberian Outpost options as of February 4.
Looking at the bottom line may put a bit of a chill in the air. Cyberian recorded a net loss for its fiscal '98 of $7.1 million. For the third quarter ended November 30, the company postted a loss of $7.6 million, or 34 cents per diluted share, vs. $1.1 million (12 cents per diluted share proforma) for last year's comparable quarter.
The net loss for the nine-month period ending November 30 was $17.4 million (89 cents per diluted share) vs. a net loss of $2.6 million (34 cents per diluted share pro forma) for the prior year's nine-month period.
From a sales perspective, Cyberian is building itself into a cool address. But the company is relatively new in a new industry where not all of the rules are written yet. In an industry that is still learning about itself it's too early to know if COOL can remain hot for investors.
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