Autobytel Inc. ABTL
March 24, 2002 - 10:31am EST by
angus309
2002 2003
Price: 3.71 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 115 P/FCF
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT

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Description

Autobytel is a former high flying dot.com which because of it's broken share price presents an interesting opportunity because of the underlying business, security valuation, and as a possible acquisition candidate. Formerly known as Autobytel.com, this company owns and operates it's eponymous site, as well as Autoweb.com, Carsmart.com, and Autosite.com. These sites most simply help buyers like you and me buy cars by comparison shopping on price, model, features, location, etc. I've used the site and it is quite good. ABTL is also an internet automotive marketing comapny dedicated to helping retailers build brands with CRM tools which it provides; a realtively new extension. ABTL is the largest at what it does, and significantly larger than it's next closest competitor (Carpoint).

Where sales come from:
The company reported Q4 revs of $20.5mm, an increase from $16.8mm a year ago, and this revenue was obtained as follows: $14.8 from program fees (that's manufacturers customer referral fees), $2.3 from ad sales, $1.8 from CRM sales, and $1.7 from related product sales.

Some recent financial highlights and thoughts:
In this most recent Q the company reported posivite EBITDA of 1 cent per share, and gave guidance of 7 to nine cents per share for the year. The company has $33mm in domestic cash balances (no debt) and approximately $35mm in cash balances in it's european sub (which it has stated may be sold). The company claims to be respoinsible for 4 percent of all domestic new car sales ($17B last year). The company's goal is to generate 10%, and grow the other segments (ad sales, CRM sales especially) dramatically as well. Without a terrible amount of imagination, you might agree with me that this company addresses a very wide and deep market; assuming good execution and continued number one market share, this could be a very real business.

Very simple valuation metrics:
Per Share:
Book Value: $2.
Price/Sales: $1.26
Net Cash/Share: $2.25

Potential take-out:
I mention this last for a reason...it's difficult to handicap but there was a transaction last year with a bit of relevancy. In December the new CEO of YHOO agreed to buy Hot Jobs (HOTJ), an on-line job serach site for $436mm in cash. Why I think it's relevant?: HOTJ look a lot like ABTL. A busted dot.com which was mending, providing a real service as does ABTL. In it's last quarter prior to the announcement of acquisition, HOTJ did $27mm in revenue and lost money. ABTL came close to that revenue figure and actually made money. HOTJ's acquisiton price was 4x revenue. If that figure were applied to ABTL you would get an approx. $12 stock. I believe the job market is easier/better than the car market...it is larger and involves more money. However, HOTJ has a fierce competitor in Monster, and ABTL really has the dominant position. Finally YHOO in late December gave it's users access to ABTL's automotive web site.

Catalyst

1. Dominant player in a very large market. If the company continues to execute it will grow into a larger more valuable enterprise. 2. Valuation lends some back-stop protection: over 60% of share price is net cash. C.F. positive. 3. Recent related transaction indicate ABTL would be attractive to an acquirer at a higher price.
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