As we begin to understand genetics more and more, it is generally believed that biotech companies across the board will eventually prosper. Of course, this will not prove true.
For a few years already, we've understood that e-commerce, for example, has excellent potential, but only a small handful of companies are leading the charge and will ultimately succeed. This will likely describe the biotech industry, too. Partially due to a lack of human resources, only a handful of biotech companies will ultimately dominate. Biotech firms fight fiercely for intellectual capital. Brilliant scientists don't grow on trees. When a smart scientist emerges, everyone rushes to hire him or her, and typically the strong companies get stronger because they have more to offer candidates.
The Quick Foolish Motif (QFM) here is this: in the midst of excitement, choose your biotech investments carefully! The Fool's biotech message board is active and it may serve as a good starting point in getting you to focus on the best individual companies. (You know we'll be talking about them here, too, and the Rule Breaker Companies board does as well.)
You Invest Online, and Amazon Does, Too
Investor and e-commerce company combined, Amazon.com (Nasdaq: AMZN), announced that it will take a 5% stake in online-car-buying company, Greenlight.com. As part of the deal, Amazon will introduce Greenlight to its 16 million registered users, and in return Amazon will receive $82.5 million worth of warrants that allow it to increase its stake in Greenlight.com to 30%. All in all, it's a groovy deal for Amazon. If things go well for Greenlight, Amazon can increase its stake. If not, Amazon can play down the partnership (and probably still make money).
Amazon already owns stakes in Ashford.com, Della.com, Gear.com, HomeGrocer.com, Pets.com, and Drugstore.com. For each investment, Amazon apparently commanded an attractive valuation and favorable conditions for itself, because it is the Top Dog and companies are eager to be associated with it. The company is clearly in the power position and is profiting.
Amazon's combined cash investment in the six firms we just listed is about $160 million, and it is now estimated to be worth $1 billion to $1.5 billion, even though most of the companies aren't yet public. (The values are estimated.) Today, Pets.com filed to go public. Amazon owns 43% of Pets.com, so if Pets.com receives a strong (and lasting) reception from the stock market, Amazon's investment portfolio will be padded handsomely.
You may believe that partnering with Amazon is the kiss of life for any online commerce firm, but so far that hasn't entirely proven true (unfortunately, we suppose, for Amazon shareholders). Pets.com is ranked as the third most visited online pet store, not the leader. Part of the reason for this may be that Amazon is less than aggressive (from what I've seen) in "advertising" its partners on its flagship site. However, this is probably the right approach for now.
Amazon is still attracting so many new customers each month that the company's focus should be on getting those new customers acquainted with all of Amazon's offerings, first. (The worst thing that a site can do with a new customer is immediately send them elsewhere.) After new customer acquisition slows, there will plenty of opportunity to more aggressively market partner sites. Plus, later in the game, there will be less risk of "offending" regular customers with cross-promotion to outside sites.
On a side note, I wouldn't be surprised if Amazon has plans to eventually try to fully acquire partner sites that do especially well, and then integrate them completely.
The Rule Breaker Port is happy to introduce a new page to Breakerdom today! The page is called "Rule Breaker Must Reads." On it, we present articles from outside sources that we believe capture the spirit of Rule Breaking. We present two articles to start (Rule Breakers are rare, after all), but we're counting on you to send us more articles that we'll display on this page. If you read something that strikes you as particularly Rule Breaking, you can send it to us through the new "Must Read" page. We'll display all of the appropriate, Breaker-esque articles that you find and send us, so that everyone can read them. So check out "Rule Breaker Must Reads."
Next up, don't miss David and Tom Gardner this weekend on the Fool Radio Show. They'll be speaking with the CEO of a likely Rule Breaker, Enron Corp. (NYSE: ENE). They'll also interview Mr. John Bogle, the founder of the ever-so-friendly Vanguard index funds, and they'll discuss earnings reports and dumbest investments.
Last up, for a review of all Foolish content this week, check out Jerry Thomas's weekly Notes From a Fool. Then see Fool Watch for all the headlines from this week, to see what interests you. Finally, on Friday in Drip Port we consider what looks to be a good company at a good price.
Be a downright Fool this weekend!
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