Internet news/anaysis in brief (EBAY, GOOG, IACI, INSP, NFLX, OSTK, TSG, TZOO)

by: David Jackson

  • InfoSpace (ticker: INSP) is having problems in its mobile business unit, according to Rafat Ali. "According to multiple sources I have talked to over the last week or so, many of the top executives have left or are leaving."
  • Netflix (ticker: NFLX) began selling used movies, presumably from excess inventory. You can buy used movies for $9.99 with free shipping and a guarantee. Quick comments: (1) You can buy used movies for less on Amazon and eBay, but the sellers on those sites often make money from excessive shipping fees. Including shipping, Netflix may be cheaper. (2) Should improve the company's cash flow.
  • (ticker: OSTK) announced that it is acquiring online travel company Ski West for $25 million in cash plus an earn out based on future performance. Ski West, which is profitable, offers access to lodging, vacation, cruise and transportation bargains in popular ski areas in the U.S. and Canada and more recently in the Caribbean and Mexico, as well as cruises. Quick comments: Two possible views of this: OSTK is smart to monetize its traffic by cross selling travel services; or OSTK is becoming too unfocused, and will never reach critical mass in auctions and travel. Whichever is correct, in the short run this is incrementally negative for the other online travel companies including IAC's Expedia (ticker: IACI), The Sabre Group's Travelocity (ticker: TSG), and Travelzoo (ticker: TZOO).
  • Is Google (ticker: GOOG) the next eBay (ticker: EBAY)? That's the question asked by the Online Trading blog. He answers: "If Google is able to introduce new features to the market, then the rally can continue... if Google missed earnings even slightly, it will stop the rally immediately. Look at the eBay chart... it's similar to Google story." Quick comment: eBay's stock decline was accompanied by a clear shift in sentiment: newspaper articles about eBay sellers setting up their own sites, claims of market share gains from, and slowing revenue growth in its core market. So far none of those things apply to Google.

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