PFSW

[David Randolph]

We already know eCost is doing much better than expected:

• eCOST.com Kicks Off Holiday Shopping Season with Strong Web Traffic and Sales Demand During Black Friday/Cyber Monday
Business Wire (Wed, Nov 28)

But we still don't know how the more important (because it sports a much higher gross margin) service fee business is doing in Q4. We'll know when the company reports the 4th quarter and full year results, probably in February 2008.

In the meantime I'll keep holding PFSW for the long term.

[visualjourney]

Last month I posted the monthly uniques of ecost for the month of October and have done so again today, but for the month of November. "The monthly uniques of a website is the absolute number of new monthly visitors to a website and doesn't include repeat visitors." So, based on the information from quantcast.com, ecost has had a 65% increase in new visitors from October to  November. That's a 65% boost in traffic and it not even christmas.

[David Randolph]

Last month I posted the monthly uniques of ecost for the month of October and have done so again today, but for the month of November. "The monthly uniques of a website is the absolute number of new monthly visitors to a website and doesn't include repeat visitors." So, based on the information from quantcast.com, ecost has had a 65% increase in new visitors from October to  November. That's a 65% boost in traffic and it not even christmas.

Thanks for this information visualjourney

Friday was the highest volume day for PFSW since the following news was released ...

• eCOST.com Kicks Off Holiday Shopping Season with Strong Web Traffic and Sales Demand During Black Friday/Cyber Monday
Business Wire (Wed, Nov 28)

... and price was up 4%. It seems that finally investors are paying some attention to undervalued micro caps.

About 9 months ago most people thought eCost would file for bankruptcy. Now it is a profitable and fast growing operation. The service fee side of PFSW is also doing very well.

I think the 30%-50% rise in the share price doesn't reflect the change in fundamentals and at $61 M market cap PFSW is very attractive. It should be at least a $150 M market cap (15 times EBITDA) considering the current financial information.

I'll keep holding PFSW for the long term.

[David Randolph]

PFSW is back to where it was when I made my latest update, that is, last Monday. eCost's improvement seems to be more pronounced than even I thought. Fundamental trends at PFSW are positive, the company turned to profitability, now we just have to patiently keep holding the stock to earn a few bags of profits.

[hyhl]

U.S. Internet Sales Slow as Consumers Limit Spending (Update1)

By Heather Burke

Dec. 16 (Bloomberg) -- The growth of U.S. Internet sales slowed to 18 percent this holiday season from the year-ago period as consumers limited spending because of declining home values and higher gasoline prices.

Online spending from Nov. 1 through Dec. 14 was $22.7 billion, Reston, Virginia-based ComScore Inc. said today in a statement. Web sales in November and December may advance only 20 percent, a record low for the industry, and slower than the 26 percent gain made last year.

U.S. retailers may see the worst holiday sales growth since 2002. Customers, grappling with $3-a-gallon gasoline and the first drop in the median home price since the Great Depression, have reduced purchases. Wal-Mart Stores Inc. and Toys ``R'' Us Inc. offered discounts of 50 percent or more and free shipping on Web purchases to attract shoppers.

``Many consumers across all income segments are either feeling the pinch this holiday season or are lacking the confidence to spend at the rate they had in the past,'' ComScore Chairman Gian Fulgoni said in the statement.

Web sales have increased 17 percent since Nov. 1 among those earning $50,000 to $100,000 and 28 percent among consumers with incomes of more than $100,000, according to an analysis by ComScore. Consumers earning less than $50,000 have spent 10 percent more on online shopping than in 2006, dragging down overall results, ComScore said.

`Green Monday'

U.S. retailers' shares have dropped during the holiday season, with the Standard & Poor's 500 Retailing Index falling 11 percent since the start of November, compared with a 5.3 percent decline on the S&P 500.

Amazon.com Inc., the world's largest online retailer, fell $3.32, or 3.6 percent, to $89.08 on Dec. 14 in Nasdaq Stock Market composite trading. EBay Inc., the largest global auctioneer, dropped $1.39, or 4.1 percent, to $32.70.

A record $881 million was spent Dec. 10, known as ``Green Monday,'' and was the heaviest Web spending day on record, ComScore said. The remainder of the week saw more ``modest spending,'' Fulgoni said in the statement.

Running Late

Toys ``R'' Us, the biggest U.S. toy chain, was offering free shipping on select orders of $49.99 or more through tomorrow. The Wayne, New Jersey-based retailer was also advertising $20 off of toy purchases of $100 or more through EBay's PayPal.

Macy's Inc., the second-largest U.S. department-store chain, is offering free shipping through tomorrow on purchases of $99 or more on select items. Wal-Mart, the world's largest retailer, on Dec. 14 was offering 97-cent-shipping on a $578 Toshiba laptop computer and a $243.34 Garmin GPS system.

In-store sales fell 2.7 percent in the seven days through Dec. 8, following a 4.4 percent decline a week earlier, Chicago- based research firm ShopperTrak RCT Corp. said LAST week. About 12 percent fewer shoppers visited stores last week, compared with the same period a year ago, ShopperTrak said.

Consumers are completing their holiday shopping later than usual, and they're trimming purchases because of higher food and energy costs. The National Retail Federation in Washington forecast a 4 percent increase in holiday sales this year, the smallest since 2002.

Toys ``R'' Us sales did well the weekend after Thanksgiving, and have been ``erratic'' since, Chief Executive Officer Gerald Storch said in a Dec. 13 interview. Sales on Dec. 22, the Saturday before Christmas may rival Black Friday, the day after Thanksgiving, Storch said.

``We're being more aggressive with promotions but we're not discounting closer to the cost of the product than we did in past years,'' said Storch. ``We have a very aggressive promotional schedule between now and Christmas.''

To contact the reporter on this story: Heather Burke in New York at [email protected] .

Last Updated: December 16, 2007 14:55 EST

[David Randolph]

Thanks for this article hyhl

The growth of U.S. Internet sales slowed to 18 percent this holiday season from the year-ago period ...

It appears that eCost.com is growing a lot faster than the industry average:

«From November 22 through November 26, eCOST.com's booked revenue increased 67% compared with the same Thanksgiving holiday period last year. On Black Friday, eCOST.com saw a 105% increase in demand vs. Black Friday 2006.»

There's reason to be optimistic about eCost.com future. PFSW's valuation, at $56 M, doesn't reflect this at all.

I'll keep holding PFSW for the long term.

[David Randolph]

PFSW reacted very well to the 200 days SMA support on that awful November dip which almost completely erased my profits. Now the stock is one step away from making a bullish breakout, as it should, given the fundamentals of the company.

If PFSW is able to close above $1.39 that clears the way for a move towards the 2007 high of $1.59. I believe the stock is worth a lot more than that.

I'll keep holding PFSW for the long term.

[la-onda]

nice sum up
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=tm&bn=14088&tid=38021&mid=38021&tof=6&frt=2

[David Randolph]

I've read the 3rd quarter conference call transcript yet again, and it has a lot of interesting information.

The more I understand PFSW's business, the more I see that eCost isn't the most important in terms of PFSW's profitability, because management targets a 9-10% gross profit margin at eCost, and the Service Fee Business has a 25-30% gross margin target, which in management's words, is "highly leverageable".

The new business pipeline was worth about $40 M at the end of the 3rd quarter, that is, $12 M more than in the preceding quarter. And this doesn't include the new contract wins the company announced in the 4th quarter, which were the following:

• Microlife Chooses PFSweb to Support E-Commerce Partnership with the Blood Pressure Association in the UK
Business Wire (Thu, Oct 11)

• PFSweb Partners with Three New Service Fee Clients
Business Wire (Tue, Nov 13)

«"It is evident that the solutions we are crafting today for online retail prospects and clients are resonating within the marketplace. Over the last few months, we've noted a marked increase in the number of proposals we have had the opportunity to participate in for high-profile brands. Our willingness to custom-design solutions around unique brand requirements, the quality of our services, our proven international operations and our alignment with leading-edge front-end eCommerce technology platforms are all differentiators that have resulted in a competitive edge."»

eCost also seems to be doing very well lately:

• eCOST.com Kicks Off Holiday Shopping Season with Strong Web Traffic and Sales Demand During Black Friday/Cyber Monday
Business Wire (Wed, Nov 28)

There's reason to believe the 4th quarter results will be strong.

From a valuation standpoint PFSW seems to be attractive, trading at 5.9 times 2007 EBITDA, while the largest company in this space (GSIC) just acquired a smaller competitor for 15 times EBITDA, at least that's what PFSW's management says, but I'll confirm the information over my next update:

«On the B2C side our biggest and most common competitors GSI Commerce, we also see Innotrac and historically seen a preview which was recently acquired by GSI for 15 times EBITDA.»

So, GSI Commerce (GSIC) and Innotrac (INOC) are PFSW's main competitors in this Service Fee Business segment.

We'll study these two companies over the upcoming follow up analysis on PFSW.

I'll continue holding PFSW for the long term.

[hyhl]

It is interesting to notice that GSIC only earns money in the 4th quarter. But the profit of this single quarter is able to truimph over the loss of all other three quarters.

I wish PFSW could do as well as GSIC in the 4th quarter.

[David Randolph]

It is interesting to notice that GSIC only earns money in the 4th quarter. But the profit of this single quarter is able to truimph over the loss of all other three quarters.

I wish PFSW could do as well as GSIC in the 4th quarter.

Yes, that's interesting and weird, since PFSW's service fee business historically didn't have any positive seasonality in Q4. The new stock that I'll cover next will be GSIC.

PFSW is suffering from the same malaise as JAKK and SYX, which are heavily dependent on the US consumer. The "sector followers" or "macro players", who don't pay attention to each company's specific and unique fundamentals are winning the short term battle.

My view is the following:

- Say US consumption stays flat or even goes down 1% in 2008. e-commerce, instead of growing 18% like it did in 2007, will grow just 5%-10%. What does this all mean for tiny eCost, taking market share from competitors which are 100 times larger? Nothing in my view.

Overall eCommerce spending jumped 18% in 2007 vs 2006, yet eCost revenues were up something like 80% in Q4. So, say, eCommerce goes up 5%-10% in 2008, eCost sales will be up "just" 50% ... gee, what a negative outlook, let's sell it for 4 times EBITDA

Unfortunately, only time and the actual specific positive results can turn this negative tide ... between quarterly results we're in the hand of "macroeconomists" (which by the way are often wrong about their macro outlook).

I'll patiently keep holding PFSW for the long term.

[David Randolph]

PFSW's higher margin service fee business continues to add new clients:

• Urban Brands Selects PFSweb to Support Marianne and Ashley Stewart Online Stores
Business Wire (Tue 8:00am)

I'll patiently keep holding PFSW for the long term.

[hyhl]

An interesting read:

http://www.sbnonline.com/Local/Article/13760/71/0/Stepping_up.aspx

[la-onda]

nice finding hyl, applauds

PFSW is also down with the market;

PFSW: Short Interest DN 3.5% to 676.7K at the End of Dec 2007
Thursday , January 10, 2008 16:50ET

According to new short interest data from NASDAQ, short interest for PFSweb Incorporated (NasdaqSC: PFSW) DECREASED 3.5% to 676,700 shares as reported at month-end December, 2007. Based on PFSW's 20-day average daily share volume of 96,117, it would require approximately 8 day(s) of buying to cover this short interest.

[David Randolph]

nice finding hyl, applauds

I agree, great article

PFSW is also down with the market;

Yes, the most frustrating thing about the negativity of the market is that it drags down almost all stocks, good or bad. This happens because valuation multiple contract. It is also why I still devote some time to analyzing the general market trend, or I would completely ignore it, just like a business owner ignores it as he conducts his business.

A company going from tens of millions of dollars to hundreds of millions or even billions of dollars in value, most of the times, doesn't depend on the macroeconomic landscape but on the company's intrinsic fundamentals. It isn't if the economy grows 1 or 3% that changes a company's long term value in my view.

PFSW's fundamentals have been improving and I love the business model. I'll continue holding PFSW for the long term, regardless of what the stock does over the short term. If I wanted to trade for the short term I wouldn't be in stocks, which, in my view, would have a lot of company specific risk.

There's more to say about this issue ...