Internet Business Share Discussion Threads

[valustar1] 14/12/2007 07:43

That came out of the blue!

Leaves Maz free to grow his business with out worrying about the City etc, hes not even on the new board.

[stegrego] 14/12/2007 07:35

hmmm - as a holder of TMN and an ex holder of IBG, I'm not sure what to make of this merger.

Were the IBG results inline?

Looks like a better deal for holders here to me, but you may see it differently.
TMN already fallen a silly amount this year and I wonder if this was the reason?

more importantly what will the market think?

[the analyst] 14/12/2007 07:15

Internet Business Nil Premium Merger with IBG

14 December 2007
Not for release, publication or distribution, in whole or in part, in, into or
from any jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction

RECOMMENDED OFFER BY TMN GROUP PLC FOR INTERNET BUSINESS GROUP PLC

The Boards of TMN Group plc ("TMN") one of the UK's premier online direct
marketing groups, and Internet Business Group plc ("IBG"), the online
advertising and media specialist, are pleased to announce that they have
reached agreement on the terms of a recommended proposal for TMN to acquire the
entire issued and to be issued share capital of IBG by way of a share-for-share
exchange.

[the analyst] 14/12/2007 07:14

Blimey, bit of a surprise...

[stemis] 13/12/2007 11:38

I think margins for big clients are down to about 20%.

I think you are talking about margins in a different way to those in the accounts. The margin you are talking about is the percentage of the commission paid by merchants to affiliates which is retained by DGM/IBG.

The margins in the accounts is the percentage of the revenue that DGM/IBG retain which is not abosrbed by their operational costs.

Presumably a large element of retention by DGM is due to inertia. Merchants are not 'unhappy enough' with the service, the affiliates, the personnel they deal with to make it worth their while going through the hassle of changing.

[hirschnathan] 13/12/2007 11:16

stemis

I think magrgins for big clients are down to about 20%. Secondly, if merchants are happy on the dgm nework, there would be a reason for it, something that af aw buy... can not provide, so (forcing) them to switch may be only a short term gain. It wouldnt make sense to take on the dgm interface because for ibg to mnanage the dgm interface, especially since they didnt grow up with it would be hassle and having to interfaces would be a headache.
Unless the mercahants on dgm uk have a fixed contract, that may have some benefit until the contract expires.

Anyhow, thats my view

[stemis] 13/12/2007 10:33

I don't know enough about DGM's business to know whether it would be a decent add on. However DGM's UK business turned over £16m in 2006 (although admittedly 2007 H1 figures were well down). It would certainly give scale to IBG and presumably there are 'some' decent people in the business (which has been mentioned as a constraint on IBG's expansion).

If (and I know its a big if) IBG could retain the merchants and affiliates and migrate them to its platform, it seems plausible that it would massively enhance profitability, e.g.

- IBG retain £8M of turnover
- Marginal contribution was, say, 30%
- Cost of restructuring of £1m
- Acquisition cost £3m

After tax that would be a 2.4 year pay back and would more than double IBG's size in one fell swoop.

Obviously I don't know if any of this is accurate. I was just musing if IBG had considered it.

[hirschnathan] 13/12/2007 09:01

stemis

what for? £3m for some uk clients?

[stemis] 13/12/2007 08:16

DGM ---> They hardly make any profit

Bit of an understatement.

2005 - lost £494,000
2006 - lost £2,237,000
2007 - forecast to lose £2,200,000 (having lost £1,392,000 in H1)

Admittedly there is some chunky goodwill amortisation in there, but if you add it (and share option charges) back the trend hardly looks encouraging

2005 - adjusted profit £800,000 on sales of £20,561,000
2006 - adjusted losses £929,000 on sales of £22,965,000
2007 H1 - adjusted losses £1,106,000 on sales of £9,781,000

I wonder whether IBG have considered acquiring the UK business. Migrate all the merchants and affiliates onto IBG's platform and close the rest of the business down.

[nghomi] 12/12/2007 19:55

DGM market cap is £6m. They hardly make any profit and I am not sure the cash position even after today's announcement. IBG is profitable and cash of at least £1.5m, market cap seems to become closer to DGM's one! While I cannot be bought into the £100m company, imo IBG's fair price should be around 18p.

[hirschnathan] 12/12/2007 18:56

I get more and more amazed at the disposable income people seem to have. The amount of expensive gadgets I have sold this year, is unbelievable. When they talk about a credit crunch, people not spendng.... I am not sure where. The worst thing that bugs me, how many times do people actually use the items that people buy? Looks like the best bus. to be in this year is car boot sales.

[moob] 12/12/2007 13:23

Strategic review please - get this pup down to 2p where it was

[stemis] 12/12/2007 13:04

DGM sale of 51% of UK business seems a bit desperate to me. It looks like DGM were running out of cash and having worked their way through the money from last placing in August, had nowhere else to go.

[clond] 12/12/2007 12:58

ASC 42 million turnover 3.5 million profit market cap 175 million

IBG 12 million turnover 1.2 million profit market cap 10 million

i don't see a profit ratio much different however I do see market cap !

[hirschnathan] 12/12/2007 12:36

dgm 51% mbo at 1.5m

[lord buffett] 12/12/2007 11:16

SteMiS

From an earlier post of mine, made shortly after the investors meeting back in the summer:

"What Maz deduced from the Strategic Review process was that to achieve the required outcome, IBG needed to scale-up the business and move the company up to the next level, where a more acceptable premium was likely to be offered; as I understand it in the region of £50-100m revenues, £5-10m pre-tax in rough terms.

This will take some investment and time to achieve, but the company are confident that this can be achieved in the medium-term by reinvesting some of the cash generated over the next couple of years back into the business to fund expansion and product development.

They expect to achieve all this whilst still growing profits at a steady rate, albeit not at a "maximised" one where they don't invest for the future and growth reaches a ceiling in a few years time."

The sort of timescale we were [informally] discussing was by about 2010.

(Furthermore, it is necessary to point out that Maz was talking from the heart about his ambitions/hopes for IBG over the next few years, not making a hard-and-fast forecast.)

[stemis] 12/12/2007 08:12

He said he is aiming for IBG to become a £100m company - he just doesn't think he can do purely through AF, because it is a maturing market, but through synergies with his marketing division.

I don't suppose he gave any timescale did he?

For IBG to become a £100m company its going to reach £10m PBT or so. Bearing in mind that we are currently at £1.4m thats quite a tall order. Five years at 50% compound growth would do it.

[the analyst] 11/12/2007 20:32

Hi hirsch, it was Maz that was explaining to us that the market growth rate for affiliate marketing was slowing. That's not to say he thinks it won't continue to grow for years to come, just that it will not grow at such a fast rate and that competition will increase even more. He still seems to have very big ambitions for IBG, though, and I'm sure he will create investor value for those buying in at these levels. He said he is aiming for IBG to become a £100m company - he just doesn't think he can do purely through AF, because it is a maturing market, but through synergies with his marketing division.

When you say about 700 merchants, you are, of course, talking about just AF, not the online market in general. How saturated is the online market as a whole? That is, how many of the significant merchants are already into it and how many are yet to consider it. AF only have a fraction of the online market so I guess that even if most big merchants already have an affiliate marketing strategy then there is potential for IBG to expand at a larket-leading rate if they poach merchants from other networks. Are they doing that? More importantly, can they do it without compromising on terms? They need to maintain margins as well as increase revenue.

As we know, most of the revenue comes from the big merchants (those with high sales) - Have you seen any evidence of recent success by IBG in persuading big merchants to leave other networks and come to AF recently? Or perhaps evidence of mid-sized merchants on the AF network becoming 'big' merchants?

do you have any thoughts on the type of innovative new media products Maz may be considering launching?

I don't know why, but I have high hopes and I think that by this time next year we could have quite a few new, innovative, revenue-generating business ideas beginning to bloom at IBG and a lot of optimism back on these boards again...

[hirschnathan] 11/12/2007 19:44

yes it was very busy yesterday

[coffeelito] 11/12/2007 16:45

At 1:09pm today, Monday 10 December, more money was spent online in a minute than ever before, according to Retail Decisions, the card issuer and world leader in card fraud prevention and payment processing.

UK online shoppers spent an estimated three quarters of a million pounds (£767,500) in just 60 seconds at nine minutes past one this lunchtime. Carl Clump, CEO of Retail Decisions, commented; "Christmas internet shopping traditionally peaks on Mondays as people buy online during their lunch break to save on more trips to the high street. Our data supports the ongoing trend that internet retailers are enjoying another bumper Christmas."

Today is expected to be the biggest UK online shopping day ever, with sales worth £370 million, almost treble the £126 million average day rate for 2007, and 106% more than on the second Monday of December last year.

Total Christmas e-retail sales (i.e. Q4 2007) are expected to reach £17.6 billion, an 82% increase of the £9.6 billion recorded for the same period in 2006.

Kelkoo's UK MD, Bruce Fair, illustrated the power of the internet to Christmas shoppers: "Nintendo Wii has received more searches on Kelkoo UK in the first 10 days of December than Ipod and Iphone combined, and yet users cannot find the Nintendo Wii anywhere to buy, either online or in the high street. Retailers are out of stock, and so are withdrawing their Wii listings on most online shopping comparison portals and sponsored websearch, leaving users completely unaided in their pursuit of a Wii this Christmas. In response, and in order to connect buyers and sellers at this most important time of year, Kelkoo UK has agreed to list retailers' Nintendo Wii Consoles for free until Jan 31st 2008. The upside is that for the last 4 days to December 10th, Kelkoo has listed at least 9 retailers who can offer the Nintendo Wii to online buyers. One retailer is even shipping to the UK from France, and two others are offering a free Nintendo Wii to users who take out a new mobile phone contract. They are out there.... "

KEY E-TRADING STATISTICS

MONDAY 10TH DECEMBER 2007

* Monday 10 December will be the biggest online shopping day ever, with sales worth £370,000,000.
* The biggest hour ever will be between 11-12am that day, with sales worth £32.400,000, two hours earlier than the peak hour last year, on Monday 4th December 2006.
* 40% of the sales that day, worth £148,000,000 will take place outside of traditional shopping hours, either before 9am or after 6pm (i.e. when most high street shops are shut) , up from 38% last year.


WEEK 50 2007 - MONDAY 10 - SUNDAY 16 DECEMBER

* This will be the biggest e-sales week of the year, with online sales worth £2.359 billion, almost three times the £0.885 billion average for the year.


E-CHRISTMAS SALES
Total Christmas e-retail sales (i.e. Q4 2007) are expected to reach £17.6 billion, an 82% increase of the £9.6 billion recorded for the same period in 2006.

2007 E-SALES
IMRG currently forecasts that full year 2007 e-retail sales will be £53.3 billion, 76% higher than the £30.2 billion recorded for 2006, and considerably exceeding the £42 billion IMRG estimated at the beginning of this year.

UK INTERNET SHOPPERS / USERS
The UK's 27 million online shoppers will generate 860 million parcel deliveries in 2007.

43 million Britons aged 16+ use the internet. More than 60% of UK households, 15+ million, are online and 85% of these have broadband connections

ABOUT IMRG:
IMRG (Interactive Media in Retail Group), founded in 1990, is the industry body serving e-retail: www.imrg.org

ABOUT RETAIL DECISIONS (ReD):
Retail Decisions, founded in 2000, is a payment card issuer and a world leader in card fraud prevention and payment processing: www.redplc.com

ABOUT KELKOO:
Kelkoo is a wholly owned subsidiary of Yahoo! and is Europe's largest shopping comparison network, listing in 10 countries www.kelkoo.co.uk

CONTACT:
James Roper, CEO, IMRG:
[e-mail] - [phone]


CONTACT:
Carl Clump, CEO, Retail Decisions
Angela Yore, PR Contact, Retail Decisions
[e-mail] - [phone]

CONTACT:
Bruce Fair, MD, Kelkoo UK:
[e-mail] - [phone]


ENDS

Beth Mathieson
Administration Manager
IMRG
email: [e-mail]
Telephone: [phone]
Skype Name: BethIMRG
www.imrg.org

[niggle] 11/12/2007 16:09

dunk in the coffee?

Who asked me if ut was the direct/beta?, well no it wasn't but I would love to be Beta'd

[coffeelito] 11/12/2007 12:05

drop in the ocean

dip toe in water

[hirschnathan] 11/12/2007 11:58

Funny you mention the online market reaching maturity, how can it be mature with 700 merchants?
700, is a dip in the ocean.