Loss to Profit, let's make your lost money back !

[saigai]

PFSW another long term trending up. the following is a repost from the Yahoo message board.


http://finance.yahoo.com/q/it?s=PFSW (Insider buying link)

30% of the float held by insiders and instituions
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Re: Ecost - seasonal effect (1 Rating) 1-Sep-07 11:27 pm It's not seasonal effects. For electronics, Q2 is actually the slowest quarter, accounting for 21.3% of total sales vs. 23.1% for Q1 and a whopping 32.2% for Q4. (http://www.bizstats.com/seasonality.htm - see the row number 5 for "Radio, TV & Electronic Stores")

For ecost, Q4 06's sales was $21.1M vs. $21.6M for Q1 07 and $27.1M for Q2 07.

As you can see from the above data, ecost has been increasing its quarterly revenue **in spite of** seasonal effects rather than because of seasonal effect, which would have you to expect sales to decline from Q4 to Q1 to Q2.

As another data point, look at OSTK, BBY and CC. OSTK is a discount e-tailer like ecost while BBY and CC are in electronics like ecost. All 3 have sequentially declining revenue from Q1 to Q2:

http://finance.yahoo.com/q/is?s=OSTK
http://finance.yahoo.com/q/is?s=BBY
http://finance.yahoo.com/q/is?s=CC

ecost revenue in Q3 should increase more than the Q1-to-Q2 improvement (25%) we've seen. Instead of having the seasonal effect working *against* it, Q3 (and Q4) will finally have the seasonal effects working for it. All stars will be aligned finally.

As far as alexa.com, it's one of the most unreliable measurements of e-tailer health. Alexa only counts the people who have gone through the troubles of downloading and installing the Alexa Toolbar into their computers. People like that are definitely not your average ecost buyers. Let's face it, the average Internet users have never heard of Alexa, let alone downloaded and installed its toolbar, and will therefore never be counted in the Alexa statistics. The Alexa statistics isn't reliable because its sampling isn't random. Rather it is a highly self-selective sample.

Look at Blue Nile, their Alexa traffic has gone down 67% since Jan, yet their revenue has gone up nicely (though not as significantly as ecost's) from Q1 to Q2:

http://alexa.com/data/details/traffic_de...
http://finance.yahoo.com/q/is?s=NILE

Meanwhile, Blue Nile stock has gone up 126% since January:

http://finance.yahoo.com/charts#chart1:s...

Why such discrepancy between financial and Alexa performances? Just like in the case of ecost, Blue Nile buyers aren't being counted by Alexa properly.

What I've been most impressed with in the ecost turnaround is the fact that they've managed to grow sequential revenue significantly despite

- having to work against the seasonal effect, and
- having slashed customer acquisition costs
- taking a very disciplined approach to sales and marketing by selecting customers based on lifetime customer value

All these bode well for the coming quarters.