He's getting $155.2 million in cash for his domains...

[Rubber DuckRubber Duck is verified member.]

Yes, they are fairly consolidated. It is the only way to fly!

I agree with Daddy (don't know why I am calling him that, he's bloody younger than me), consolidation is the way forward. Must say though I don't favour his favourite registrars. I have consolidated most of my drops at Domainsite.com. Cheap and efficient with good interface and support. All these are essential for the difficult task of consolidation. Bulk management at this site enables you to Globally change things without any real effort. Fed up with your current pay per click site, can be up and working elsewhere within minutes or if you have as many as Daddy within a day or so.

It goes back to the old thing about the quality of domains. A few good ones are a lot easier manage and cost less to renew than an ocean of dross.

ICANN god bless them, have made consolidation must easier through their new transfer policy.!

Dave Wrixon

 

[YODD]

There is hope for the rest of us.

Thanks,

Lorenzo

 

[Chaiki]

Gregr wrote: Based on the formula of his sale, my portfolio's value is $24,147,058.82.

Wow that's great! The wonderful thing about this story is it gives everyone here a great benchmark. It finally puts the hypothetical valuations and talk of what constitutes a "good name" into it's place and brings it back to a revenue equation.

The press release states the acquisition was generating 19.5million dollars a year in revenue. While there are economies of scale by purchasing the biggest assets that justify a higher valuation, this gives us all a road map. Take 19.5 million and divide by the amount of money you make per year. Then take the sale price of 164 million and divide it by the result. That is what your portfolio is worth. There is no further justification for arguing about "development value" and "this name is better than ppc value" because it would be hard think of anyone who had a nicer development portfolio of domain names than the guy who set the benchmark (Yun Ye).

As an example, working backward from gregr's value of $24,147,058. That would mean he thinks he is 6.7917 of Yun ye's 164 million sale price ... so he must be making 6.7917 of 19.5 million per year. Or $2,871,000 .. Lastly a buyer needs to apply a quality metric to make sure a portfolio is not generating it's revenue mainly from sponge bob misspellings or browser tricks (which in gregr's situation is not because we all know he has a nice set of clean names) and poof! : there's your value.

That's a pretty good living. Nice Gregr.

 

[Fearless]

I based my figures on my 2,500,000 uniques last month.

 

[DaddyHalbucks]

Yun's is an interesting comparable sale (reference point), but you can't just do some simple math and interpolate a good value for any other smaller portfolio. It may not be a perfect comparable sale, in other words, you may be comparing apples and oranges.

There are many many factors involved in domain value including: uniques, ability to monetize those uniques, existing cash flow, name quality, breakup value, etc..

Domains, or any other business, needs to follow established appraisal and valuation techniques to get the best results. The real estate business has refined appraisal techniques over many decades. Although domains is a nascent industry, I imagine a most accurate appraisal technique for domains should be a reconciliation between appraising a business and apraising a piece of real property.

The bottom line is anything is ultimately worth what someone will pay. If you have 100,000 domains with a business income of $20 million a year, and many undeveloped gems mixed in, it may command a premium.

So, simple math won't work for Joe Q. Public's 200 domains at GoDaddy.

However, there is a big upside and lesson. If you are the best of the best, you can make alot of money.

 

[David G]

....ICANN god bless them, have made consolidation must easier through their new transfer policy....

Only to a degree, mostly helpful only with com and net. It's still quite difficult and incredibly time consuming to get transfer auth codes which are needed on US Org and other ext. In addition to authorization code problems there is also the issue of some registrars making unlocking extremely hard to do.

Without needed auth codes and names also being unlocked the new ICANN policy is of no help.

 

[aakashvijay]

today one domain name is also sold from india and that is "indiagames.com". bought by chinese company in more than 10m$

 

[keyser]

I cannot really believe someone was fool enough to pay $10m for indiagames.com
:^)

 

[BiggieBiggie is verified member.]

I based my figures on my 2,500,000 uniques last month.

Nice!

just a basic observation >

2.5m/10% x $0.05=$12500 monthly min exp.

eye could quit my real job!

 

[Chaiki]

daddy I fully agree with your line :
"There are many many factors involved in domain value including: uniques, ability to monetize those uniques, existing cash flow, name quality, breakup value, etc..

But I disagree that the unique count alone justifies it. I recently asked a friend of mine how many uniques he got and the number was astronomic... but inacurate. It turns out his way of counting uniques was not the same as second friend and that friend not the same as another outside party. PPC revenue has a way of stripping the bullshi* away. You put up a simple page (or a more elaborate page) and you make money (or you don't). The revenues are either there or they aren't. There is no gaming. At the end of the day we can all be sure Marchex bought a revenue number, not a unique count. Incidentally; I am certain that the unique count they aquired is well North of 17mm a month. The 17mm figure is just US traffic, coming from above-board names. You don't want your shareholders knowing you paid 164mm dollars for 35mm unique a month but half of it is chinese traffic looking for free porn. much easier to quote the lower number of pristine traffic.. oh, and here's a nice upshot, we got all this chinese porn traffic for free.

 

[dbdomains]

; I am certain that the unique count they aquired is well North of 17mm a month. The 17mm figure is just US traffic, coming from above-board names. You don't want your shareholders knowing you paid 164mm dollars for 35mm unique a month but half of it is chinese traffic looking for free porn. much easier to quote the lower number of pristine traffic.. oh, and here's a nice upshot, we got all this chinese porn traffic for free.

Good point. I think its very instructive that in the press release Marches made a point of indicating the "stand alone guidance" for the assets in question. At $19 million per year and 80% operating income, the deal is roughly worth 10X forward earnings. It is actually a bargain for Marchex, if they really believe that Search, and hence Direct Navigation, will grow 300% over the next 4 years. Certainly there is risk, however, if the financial fundamentals didn't make sense, you would expect to see the stock take a dive. Marchex only shows $33 million of assets on their books -- they are going to have to borrow the cash, or issue more stock. The street knows this.

I would give this deal, barring unseen material adverse developments, an 80% chance of closing. There is probably a nice little arbitrage play in here.

 

[clemzonguy]

So, how does that work, tax wise? Keep title to the domains in an offshore corp, have that corp "sell" them, then keep the money offshore and tax free? SLICK!

Wonder if the would qualify as good tax planning or tax evasion?

 

[Fearless]

Wonder if the would qualify as good tax planning or tax evasion?

If you are a US citizen, that's tax evasion.

 

[Steen]

If you are a US citizen, that's tax evasion.

Maybe he's a visitor with a business in Panama and a resident of China :blush:

 

[jberryhilljberryhill is verified member.]

If you are a US citizen, that's tax evasion.

Correct. If you don't want to pay US taxes, then become a citizen elsewhere and move out. Otherwise, pay your taxes on earnings abroad.

 

[Fearless]

Are there any countries better than the US to live in that don't tax the hell out of you?

 

[Monsieur]

Are there any countries better than the US to live in that don't tax the hell out of you?

If you would know...;-)
You're lucky with your taxes in the US...

Greetings from Germany,

Stefan

 

[nicorlino]

If you would know...;-)
You're lucky with your taxes in the US...

Greetings from Germany,

Stefan

I can copy that!

 

[ozgression]

Marchex own Enhance.com (formerly Ah-ha.com) so I assume they bought the domains to get some traffic to their Enhance.com advertisers and therefore improve their longterm $$$. Smart move... they can't compete for search traffic, so go for expired/type-in traffic.

Cheers...

 

[Chaiki]

Re: Are there any countries better than the US to live in that don't tax the hell out of you?

I have been hearing this question alot lately and the choices are limited:

Bermuda, and the Cayman Islands. Thats about it. But that only works legally for tax savings if you are 'not' American. Also tropical islands are not everyone's idea of better. There are no performing arts, nightlife etc. on most of those islands. They get bad hurricanes too. Bahamas is quite poor, and dangerous. Turks and Caicos are pretty but have no infrastructure. That's it for being close enough to the US to visit.

If you like Europe there is Monte Carlo, bring your wallet (and it's not necessarily 'better' than the US) --or Switzerland, which is low tax but pretty and close to everything in Europe. Still those places get cold and are not very US like.

The best setup as I underestand is to become a citizen or national of a country like Canada, Ireland, then either legally setup your residence in a no tax country such as those mentioned above or live in London or elsewhere in England choosing your "domocile" in one of the no tax countries above. You basically get live in London and pay no tax on worldwide income. Strange setup but commonly executed and completely legal. "Google: tax domicile uk " for more info.

My personal preference is Las Vegas! Hot like the tropics, lot's to do, no state tax, low cost of living, close to everything, safe and friendly and lot's of opportunity. In a way it is almost like it's own country and the tax/cost of living savings make it more affordable than the rest of the US.