Search

...and New York stinks

If you doubt that the smell in the air is cash burning, take your nose to New York.

The smell there has become a stench, especially from the crop of e-tailers who are finding that selling over the net is a lot harder than anyone thought.

Latest filings by American companies make alarming reading.

Value America, for example, has $US67.6 million in cash on hand Ð but itÕs burning it at the rate of $US46.39 million a quarter (yes, every three months).

According to a study by newspaper, U.S.A. Today, Value America has 4.4 months until the cash runs out Ð which is another way of saying 4.4 months of life expectancy.

EMusic.com has a bit longer to live with $US63.3 million in cash and a burn rate of $US12.58 million. Life expectancy? 15.1 months. Egghead.com has $US109 million in cash, and a burn rate of $US21 million a quarter.

The list makes for disturbing reading and confirms the trend seen in all previous technology (and mineral exploration) booms Ð that is, that few companies survive the start-up blues and convert development capital into recurrent earnings.

What of the big one, the giant of e-tailing, Amazon.com?

Well, it has just lost another $US122 million in the first quarter compared with $US36 million in the first quarter of last year.

Amazon is now down to its last $US1.2 billion, but at that burn rate it has about five years of survival ahead Ð unless it reverses the loss-making trend.

Add your comment

BNIQ sponsored byECU School of Business and Law

Students

6th-Australian Institute of Management WA20,000
7th-Murdoch University16,584
8th-South Regional TAFE10,549
9th-Central Regional TAFE10,000
10th-The University of Notre Dame Australia6,708
47 tertiary education & training providers ranked by total number of students in WA

Number of Employees

BNiQ Disclaimer