Cyberian Outpost Posts $25 Million E-Commerce Loss

Cyberian Outpost, Inc. (Nasdaq: COOL), a well-known Internet retailer of computer hardware, software and accessories through its Web site Outpost.com, reported on Tuesday that it lost $25.2 million (US$) during its fiscal year, which ended February 28, 1999. On the positive side, Cyberian’s net sales were $85.2 million, up 276% from $22.7 million reported last year. Presumably, this kept the bears at bay, as the company’s stock remained relatively steady as of mid-day trading.

An Investment Darling Despite Loss

Typically, a company’s investors might react harshly to substantial losses, such as those reported by Cyberian Outpost. Not so in e-commerce land, where whopping losses are met by stockholders with nothing more than yawns.

For example, leading the pack of paradoxes is Amazon.com, which easily shrugged off annual losses of approximately half-a-billion dollars. The company then nonchalantly proceeded to announce that it expects losses to continue to mount as it bolsters its marketing efforts and infrastructure in the upcoming year. No one really cared, as the investment frenzy went on unchecked. On a smaller scale, we’ve seen the same story repeat with many other e-commerce stock favorites, like iMall, for example.

Why don’t losses affect investment in these companies? Stockholders are sophisticated enough to keep their eye on the 3 to 5 year range, rather than on the glory of the moment. In their eyes, the future is so bright, they need shades.com. For this reason, Cyberian Outpost can lose big, so long as it can continue to report that it is increasing its customer base and affiliates.

Achievements Touted

Not surprisingly, the company stressed its achievements and spelled out its corporate vision. According to Cyberian, its Outpost.com Web site ended the fourth quarter with approximately 280,000 customers in over 150 countries, an increase of 33% over the third quarter of fiscal year 1999. Purchases from existing customers remained strong, with repeat buyers accounting for approximately 45% of net sales in the fourth quarter.

Darryl Peck, chief executive officer of Cyberian Outpost said, “We took the company public in July and continue to be one of the fastest growing e-commerce companies. Our customer base has increased more than three-fold to 280,000 in February, up from 81,000 the year prior, and our revenues have nearly quadrupled to over $85 million.”

Looking forward into fiscal 2000, Peck indicates the company will continue to focus on providing “superior service and comprehensive product selection, in addition to extending service offerings, such as the recently announced OutpostAuctions site.” Peck indicates that the company will use targeted marketing and promotional activities to continue building brand equity and positioning Outpost.com as a “premier global Internet retailer.”

What Cyberian Outpost Would Like You to Remember

According to the company, its affiliate network grew nearly 400% since October 1998 to more than 25,000, adding more than 10,000 affiliates in the last four weeks alone.

Outpost.com joined GeoCities Affiliate program and will be a premier merchant in its “Pages That Pay” affiliate program. The program will give Outpost.com the ability to sell its products to over 19 million monthly visitors that travel throughout GeoCities’ 3.5 million member Web pages.

The company launched OutpostAuctions.com, a stand-alone online auction site for registered bidders that is linked from Cyberian Outpost’s home page Outpost.com.

Cyberian Outpost expanded its online hardware selling relationship with USATODAY.com, to include software, as well. Outpost.com will receive additional links throughout the USATODAY.com Technology sections, as well as increased presence on their home page and Computer Marketplace.

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