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Ten years after its launch, an initial public offering, a delisting and a second failed public offering, Buy.com Inc. has reached profitability. The Internet retailer, whose $4.5 billion market valuation at the height of the dot-com bubble — despite its bizarre, sell-more-products-lose-more-money business plan — reported sales of $162 million in the fourth quarter of 2006 and net income of $8.8 million. The profitability wasn’t a one-time holiday hit: In the first quarter of 2007, it reported net income of $722,000. Apparently, new buyout fund Clearlake Capital Group attended the victory celebration for Buy.com and walked away with a 9% stake in the retailer. A source close to the deal said Clearlake valued the company in the mid-$200 million range. The company didn’t disclose how much Clearlake paid, but Buy.com president and CEO Neel Grover said Clearlake was one of a couple private equity players that expressed interest in the online retailer. Clearlake is a new affiliate fund from Reservoir Capital Group, which has $10 billion under management across several funds. Last week Clearlake helped finance a deal by Symphony Technology Group to buy Finnish retail software provider Aldata Solutions Oyj for $167 million. Grover attributed Buy.com's turning the corner to increasing sales and offering a better user experience. The company has added features such as price comparisons and staff-produced video reviews to make the shopping experience more customer friendly. Grover also pointed out that because the company doesn’t stock the products it sells, relying instead on a network of distributors, it can take advantage of dropping prices for electronics items and not worry about writing down inventory in an age of rapid obsolescence. As for a return to the public markets, Grover said, “We enjoy being a private company … and we think we’re going to continue down this path for the time being.”—Stacey Higginbotham
See December 2005 story from TheDeal.com
Comments
From: Jim,
they are not cheating anyone. they have an excellent better business bureau rating. There are two fake controversies that make a few people down on buy.com 1) a few months back buy.com offered a $15 off $200 purchase ecoupon. Two of the popular deal hacking sites found a way to circumvent the $200 minimum even though it was clear on all the electronic coupons and fraudulently apply it to $15 puchases. Ebayer on those sites used those coupons up to 20 times on $15 single purchases ripping off buy.com for huge amonts. when buy.com issued requests for return of the products stolen those guys went ballistic . 2) a third party maker, connect3d, memory card distributor went under and reneged on rebates. the rebates were not buy.com rebates but again a misiformaiton campaign began blaming buy.com. no retailers are responsible for 3rd party rebates in the US. Buy.com did what amazon and everyone does, it refered to the rebate issuer. (the only case where the retalier had to pay rebate from company that went under was the compusa case, but that was for compusa "branded" merchandise where the consumer inference that compusa backed the rebate.
Posted on:
September 1, 2007 9:46 PM
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definitely, buy.com is making money by cheating their costomers and I will predict they are going to lose money soon by doing this.