eBay Venturing Capital on Internet Venture (Breakfast News) November 1, 1999


Monday, November 1, 1999

"Without some goal and some efforts to reach it, no man can live."
-- Fyodor Dostoevsky

eBay Venturing Capital on Internet Venture

By Richard McCaffery (TMF Gibson)

The company that made online auctions a part of everyday commerce for many American consumers expects the Internet will do the same for businesses.

And it wants a piece of the action. Online auctioneer eBay (Nasdaq: EBAY) is supplying a portion of $22 million in venture capital being invested in, a New York-based Internet start-up that offers business-to-business auction services, The Wall Street Journal reported.

It's one of the first stock investments eBay has made so far, and should come as good news for investors eager to see the San Jose, California company put its $740 million in cash and short-term investments to good use.

This is especially true for investors who believe the business-to-business market will be the real money maker for companies hosting online auctions. Why? Mainly because the margins are better. A transaction involving, say, 5,000 pounds of copper nets a lot more than a deal for a handful of comic books and wrestling action figures.

The Journal cited a Forrester Research (Nasdaq: FORR) report predicting that business-to-business online auctions will generate $53 billion in 2002, up from $9 billion last year. (That's 489% growth, for those who are counting.) TradeOut, of course, isn't the only company chasing these dollars. In a recent report, Goldman Sachs (NYSE: GS) listed 22 companies that offer business-to-business auction services, the Journal reported.

It's unclear how big a stake eBay is taking in TradeOut, which opened its doors in June and has about $500 million in business equipment for sale. Margaret Whitman, eBay's chief executive, plans to take a seat on the board.

News to Go

Cellular phone pioneer Craig McCaw is leading a team of investors that will pony up as much as $1.2 billion to prop up ICO Global Communications (Nasdaq: ICOFQ), the troubled satellite telephone company that recently filed for bankruptcy protection.

Electronics component maker and cellular phone manufacturer Motorola (NYSE: MOT) unveiled today a baseband microprocessor that supports all existing wireless phone technologies, including Global System for Mobile communications (GSM), Code Division Multiple Access (CDMA), and Time Division Multiple Access (TDMA).

Long distance, wireless, and Internet communications carrier AT&T (NYSE: T) is forming a new public company called AT&T Latin America. The company will be a merger between Netstream -- a company AT&T is buying that offers local phone service in Brazil -- and FirstCom (Nasdaq: FCLX), a publicly traded communications company with operations in Peru, Chile, and Colombia.

Entertainment and media giant Walt Disney (NYSE: DIS) has reached agreement with Chinese officials to build a $3 billion theme park in Hong Kong.

More Foolishness

Wondering where to begin? Have a look at the newly polished 13 steps to investing Foolishly... Check out the best conversations on last week's message boards... Investors who can't say good-bye to Halloween should revisit this collection of Foolish tricks and treats.

Remember to start each business day with Breakfast With the Fool at 9 a.m. Let us know what you think of this feature. Send all comments and suggestions (including Foolish quotes) to the Breakfast Fools.