H&Q Conference: Xoom.com Ready for Takeoff?

The company that melds direct marketing with an online community is pushing for members to buy more. Also, more on Lycos and USA Networks.
Publish date:

SNOWBIRD, Utah -- Online community and direct marketer



expects first-quarter revenue to rise 30% from fourth-quarter levels, a rate it sees as "sustainable" for the next several years, the company said at the

Hambrecht & Quist planet.wall.street

conference Monday.

Xoom.com has been showing impressive growth: Revenue rose almost 10-fold in 1998 to $8.3 million from $840,887 a year earlier. The site currently houses 6.4 million members, up from 5.4 million at the end of 1998. When Xoom.com users sign up for free community services, such as email, chat and Web-page hosting, they give Xoom the right to send them email about products for sale. Even though only 90,000 members have bought a product through Xoom.com's direct marketing, 70% of revenue last year came from e-commerce.

Money managers who listened in weren't convinced Xoom.com's direct-mail plan would work. "It sounds like members get inundated with email," said Richard Todaro, assistant portfolio manager for

Kennedy Capital Management

. As for the 30% quarter-over-quarter growth target, "they are starting off such a small base, so it's probably not hard to do," Todaro said. Revenue for the fourth quarter ended Dec. 31 was $3.5 million.

Xoom.com wants more of its members to become shoppers. Members bought something from Xoom.com an average of only 2.2 times per year, paying about $60 each time. So Xoom is setting up more merchandizing alliances, rolling out a shopping channel, letting users set up their own mailing lists and -- to offer members more than just ads -- launching e-zines. It's also sending more targeted email and tracking members throughout the site to sharpen its targeted advertising even more.

About 15% of Xoom's business is in the arena of small and home offices, an area the company hopes to mine further because customers there are more likely to pay for extra services, CFO John Harbottle told



The company is also looking to expand through acquisitions. "Eat or be eaten," said Chairman Chris Kitze, who called his market "a big shark tank." Xoom, the 11th most visited site on the Web, is one of few in the top 20 that hasn't been acquired by a competitor or hooked up with a big media company.

-- Suzanne Galante

Lycos-USA Merger, Part 3,567


Monica Lewinsky

and President





CEO Robert Davis and



Chairman David Wetherell are doomed to be asked questions about one another -- at least until this deal plays out.

There weren't any questions from the audience at a Monday morning panel discussion at which the two sat next to one another, but at the CMGI presentation immediately afterward, one audience member couldn't help asking what was up with the Lycos-

USA Networks

(USAI) - Get Report


Ticketmaster Online-CitySearch


deal. "I can't imagine why that question came up," Wetherell said with a sigh.

Wetherell advised the audience to look at what the company would look like down the road, not just on day one of the transaction, and he seconded Davis' statements that the deal allowed for "significant and substantive" synergies.

Nonetheless, he said, "We did think the deal would be viewed as accretive" -- something that the rest of the investing public, it went without Wetherell's saying, didn't come through on.

One thing that Davis and Wetherell don't have in common with Clinton and Lewinsky: They're still talking to each other. Immediately after Wetherell made his presentation to investors, he and Davis retired to a corner of one of the lodge's lobbies for a heart-to-heart exchange that was still going strong a half-hour after they sat down. If lounge chairs could talk, what a story they'd tell.

Even after Wetherell and Davis had issued cryptic comments, many felt there still wasn't nearly enough said. "Companies rarely talk about

a deal unless it's good," said Fritz Jordan, president and COO of

Venture Capital Online

. "And they definitely don't talk about them until they


good. It's an unwritten rule."

-- George Mannes and Suzanne Galante