Online auctioneer QXL Ricardo has announced reduced losses for the quarter to 31 December 2000.
European online auction firm has announced its results for the last three months of 2000. Its losses were GBP41.4 million – down from GBP67.7 million in the previous quarter. Turnover also fell from GBP6.0 million to GBP4.1 million as the firm exited from direct selling. On the positive side, cash burn was only GBP12.1 million. Since QXL has GBP37.5 million in cash and guarantees of a further GBP30 million, even at the current burn rate it has 17 months before it needs to make a profit. And QXL’s cost cutting drive should cut cash burn further this year.
However, eBay is a major threat. The US firm has so far had limited success in Europe, edging ahead of Ricardo in Germany but remaining behind elsewhere. Combined sales to Brits from eBay UK and eBay US have only just overtaken QXL’s UK operation. But yesterday, it emerged that eBay wants to buy iBazar, the market leader in France.
All things being equal, QXL should be well placed to shake eBay off, particularly since it is in a much better position to cash in on the imminent mCommerce boom in Europe (a third of all Europeans will have a WAP or 3G phone by 2004). QXL’s Bidlet subsidiary has the technological expertise to offer full auction functionality over WAP and SMS, in comparison with eBay’s highly limited mobile services.
However, all things aren’t equal. While QXL, with a depressed share price and limited revenue, finds it hard to raise capital, eBay has access to plenty of cash from its highly successful US operation. Following the iBazar acquisition, a marketing blitz in the UK would be all eBay needed to sew up Europe’s largest markets. Maybe the best hope for QXL shareholders is that eBay acquires the European firm. It could be a good move for eBay too, giving it the European number one slot and dramatically boosting its mCommerce offering.
