This is feeling more like the late-1990s all the time. Latest case in point: the proposed initial public offering of Accoona, an online electronics retailer that is in the process of building new businesses in search, comparison shopping and what it calls "online-based lead generation," while also venturing out into China.
The key phrase here is "in the process". As this regulatory filing shows, all but 2 per cent of the company’s revenues in the most recent quarter came from selling consumer electronics online – something it does far from profitably, given that its overall gross margin was a paltry 4.5 per cent. Add in other costs, and this was a company that lost $50m on revenues of under $150m last year.
There isn’t even much growth in its core business (on second thoughts that’s probably a good thing, given the margins.) Yes, revenues were up by nearly two thirds in the latest quarter, but virtually all of that came through acquisitions.
So what are investors being asked to pay for? An option on a comparison shopping service, an option on a search engine, an option on China, and an option on a business called ExchangePlace (where consumers sign up to get "offers from as many as four providers of products and services in which they are interested.") One of these options might pay off handsomely, but at this stage that’s a definite "might."
As John Battelle says: "That’s the kind of IPO that got us into trouble last time."
