Anodyne
Thursday, April 29, 2004
 
.bomb city -- the offering prospectus for Alibris.com, filed with the SEC but soft-pedalled by Alibris to its dealers. This document is fascinating reading. A few things that made the seasoned value investor in me sit bolt upright:

• The risks outlined in the first few pages, of which complete loss of invested capital barely even makes it onto the charts;

• The "dilution" that investors will immediately experience upon purchasing Alibris securities, much like driving a new car off the lot;

• The "poison pill" provisions which, in event of a hostile takeover, work to common shareholders' disadvantage;

• Fat stock options for senior management, accompanied by the lame old .com excuse, "If we don't compensate key staff, competitors will hire them away!"

• Continuing losses, 79 million to date and counting;

• "Class F stock," its myriad advantages to insiders, and disadvantages to retail investors;

• The %ages of revenue derived from the Amazon and Barnes and Noble contracts, which can be scrapped by both on short notice, and Alibris' admission that both Amazon and B&N are, in effect, competing with Alibris' own services;

• The proprietory "pricing service," designed to trim dealers' margins while enriching Alibris' bottom line;

• The previously undisclosed relationship with selected Goodwill stores disclosed in a footnote;

& etc.

To quote Jason Zweig, I wouldn't touch this one with a ten foot pole and a Haz-Mat suit.

- posted by cjb @ 10:21 PM


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