Rent.com knocked down at Ebay for $415m

[Rubber Duck]

I know there are other assets, but $415m is not a normal valuation for a business with an annual turnover of $40M. This is primarily a domain sale. This must beat all records and make Yin Ye's $155m look a bit sick!

Actually, just checking. Yes, we have the Arabic IDN equivalent. Probably not worth 100th the value of the real thing though!

Dave Wrixon

 

[Anthony Ng]

Two things:

1. If you read more carefully, this Rent.com deal only comes with $30 million in cash (while the rest, $385 million are in stock only), compared to Name Development's grabbing of $155.2 million in cash (plus another $9 million in stock). To be honest, I would choose the latter without a doubt.

2. To be continued ...

 

[Rubber Duck]

Two things:

1. If you read more carefully, this Rent.com deal only comes with $30 million in cash (while the rest, $385 million are in stock only), compared to Name Development's grabbing of $155.2 million in cash (plus another $9 million in stock). To be honest, I would choose the latter without a doubt.

2. To be continued ...

Take your point, but Ebays stock is not exactly junk bonds either! I wouldn't turn up my nose, I can tell you.

Regards
Dave Wrixon

 

[Anthony Ng]

Two things:

2. To be continued ...

Another thing is about the purchase price vs. annual sales (revenues). If you have read Marchex's filing with SEC:

http://www.dnforum.com/showthread.php?t=75083

You can tell that they too are paying some 8 - 10 folds of Yun Ye's annual revenues, and that's mostly because of a projected exponential growth. I think eBay is betting on that as well.

EDIT: And Dave, let's call it a deal: I'll take $155.2 million in cash and you'll get that $385 million stock, okay? LOL!

 

[mole]

You can tell that they too are paying some 8 - 10 folds of Yun Ye's annual revenues, and that's mostly because of a projected exponential growth.

LOL, these old stooges don't know the first thing about what Search Engines are doing to web navigation.

 

[Rubber Duck]

Another thing is about the purchase price vs. annual sales (revenues). If you have read Marchex's filing with SEC:

http://www.dnforum.com/showthread.php?t=75083

You can tell that they too are paying some 8 - 10 folds of Yun Ye's annual revenues, and that's mostly because of a projected exponential growth. I think eBay is betting on that as well.

EDIT: And Dave, let's call it a deal: I'll take $155.2 million in cash and you'll get that $385 million stock, okay? LOL!

It's a deal at long as I get the $30M in loose change for a bloody good holiday! LOL

Oh! by the way the main difference between the deal here, is that this is really only about a single domain name rather than the 100,000 odd acquired by Marchex. That really puts it in a league of its own.

Actually, think I have the Hindi equivalent of Rent.com as well as the Arabic version, so maybe I will get that holiday eventually!

Regards
Dave Wrixon

 

[Dave Zan]

Pardon the question, but what domain name has currently commanded the
largest $ sale figure?

 

[Rubber Duck]

Pardon the question, but what domain name has currently commanded the
largest $ sale figure?

The most expensive I am aware of is $8.5M for Business.com, most expensive domain this year is Creditcards.com at $2.75, unless anyone knows differently.

If the details on this price are correct then it would be difficult not to attribute about $200M to the domain Rent.com.

Regards
Dave Wrixon

 

[draqon]

you pulled that number out of thin air dude.

 

[Rubber Duck]

you pulled that number out of thin air dude.

Do the Math as you Yanks say!

A company whose turnover is only $40M a year can't be making more than $20M in profit. $415M therefore represent at least 20 year current earnings and probably a hell of lot more. Nobody in their right mind is going to pay more than 10 years current earnings, even allowing for strong growth.

So where does the rest of the value come from? Is Ebay.com saying that recruiting the Managment Team from Rent.com to suppliment their own skills is worth $200M dollar premium or is the value in the domain?

If this deal is going down, the figures have to stack up somewhere!

Regards
Dave Wrixon

 

[D MARKS]

I am sure EBAY anticipates revenue growth over 40 million in the future + adding their marketing & branding to this site will be a huge benefit.

They may look at this as simply an entry point to further their real estate activity as they recognize the revenue potential and scalability that the net brings in this area. You need only to look at what IAC has done with lendingtree.com...they have since added realestate.com, getsmart.com, servicemagic.com, homeloancenter.com and hopefully someday some of my sites

 

[Rubber Duck]

I am sure EBAY anticipates revenue growth over 40 million in the future + adding their marketing & branding to this site will be a huge benefit.

They may look at this as simply an entry point to further their real estate activity as they recognize the revenue potential and scalability that the net brings in this area. You need only to look at what IAC has done with lendingtree.com...they have since added realestate.com, getsmart.com, servicemagic.com, homeloancenter.com and hopefully someday some of my sites

Don't take issue with what you are saying. The point is that ebay could have taken any existing business and added their marketing and branding and no doubt achieved the exponential growth you predict. The question is why have they paid more for the existing business than it worth on paper to an accountant. They are not going to pay for the additional value they anticipate that they can grow from what they are going to add to the existing business.

The point is the existing brand is worth so much, not because it an exceptional business with a proven track record but because it has a strong brand based on a generic domain name, which will give them clout over and above what their own business skills can achieve alone. They are not buying the firm for its tangeable assets or its management team. Indeed buy outs are usually only justifiable on the grounds that a new team can sweat the assets harder. Ebay could easily have launched a business from scratch or taken over any of number of existing businesses.

Sorry, which ever way you look at this one, they are paying a hell of premium for the domain name.

 

[NameYourself]

You say it was on ebay, anyone have a link?

 

[Rubber Duck]

You say it was on ebay, anyone have a link?

No, it been reported worldwide by Reuters. Ebay is the buyer!


http://news.bbc.co.uk/1/hi/business/4103787.stm

http://news.independent.co.uk/business/news/story.jsp?story=594314

http://money.cnn.com/2004/12/17/technology/ebay.reut/index.htm

http://www.iht.com/articles/2004/12/17/business/ebay.html

http://cbs.marketwatch.com/news/arc...&archive=true&param=archive&garden=&minisite=


Regards
Dave Wrixon

 

[cwsteam.com]

VERY INTERESTING SALE and A GREAT EBAY ACQUIRE.

 

[NexSite]

Hey guys. People rent more than just apartments. We rent cars, storage space, moving vans, Office space, etc....... rent.com has tremendous growth potential. Also, ebay makes so much money they need to spend it on something. It wasnt long ago the paid over a billion for paypal. Now wether you want to buy something, anything, or rent something, anything, or pay for something, ALMOST anything, (except porn- gambling) Ebay can get a slice of the pie. Needles to say, they got their act together. Buy it at ebay, lease it from rent.com, and pay for it all with paypal. The stock should go up. I'd take the stock, cash some in , and buy yung yes portfolio. Ebay should have bought that too.

 

[Chelsea]

sure I read somewhere that ebay has a revenue of more than 3 Billion Dollar, 30 million in cash is nothing to them and regarding the shares... nice deal.
anyhow, would be pretty happy to have a piece of it.

 

[D MARKS]

It will be interesting to see what effect this may have on HomeStore.com.

They had a market capitalization of about 415 Million as of Friday and they have these high profile domains realtor.com, homebuilder.com, rentnet.com and homestore.com

They have yet to show a profit but they certainly have great traffic numbers...

If I was buying one or the other for 400+ million I would choose homestore, with the right mgt this should be a profitable company with more potential than rent.com

 

[Edwin]

This isn't some domain with a bit of traffic deal. You're talking about a dominant company (largest in its "rental" niche) with very substantial revenues. If you do a bit of digging in the Real World as opposed to the cosy, dreamy world of a domain discussion forum, you'll find that companies get bought out for anything from less than 1x annual revenues to 100x++ annual revenues, depending on all the thousands of parameters attached to its unique business situation, such as the industry it is in, the relative and absolute size of the company, its profitability etc. etc.

So applying a random "multiple of earnings" formula to a large business deal is totally meaningless. Especially when you consider (from some of the press reports) that Rent.com was about to IPO at a price that would have given it close to the same market cap as the ultimate purchase price.

Equally meaningless is trying to attribute a specific value to the domain name associated with the business. Rent.com is a great domain, but there's no way to accurately predict whether it would sell for 100K, 500K, a million, multi-millions if it were undeveloped and on the market today.

Thinking of this transaction as being in any way a "domain sale" leads us off on a wild goose chase...

 

[Theo]

Another instance where "content is king".