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Technology Stocks : XO Group Inc

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To: Glenn Petersen who wrote (87)8/12/2005 2:43:20 AM
From: Tom Caruthers  Read Replies (1) of 133
 
Hi Glenn,

I agree. Nice quarter. Now if they could only make Wedding Channel go away. Hopefully the KNOT will prevail in legal proceedings and then just beat the pants off of WC in the market.

I was then thinking what would happen if they took Wedding Channel over? The $6M or so in legal fees goes away. They become the dominant player...the only player in the wedding space. All the ad revenue goes to them. Would I be willing to take a 25% dilution - implied takeover value of $50M? Yes. 50%? Implied value $100M, don't know. If WC was doing so well, they would be public already.

The owners of WC should realize that 100% ownership of WC means they will still need to flog against a stronger competitor - KNOT - for years to come. But 25% ownership of the only kid on the block could mean much more rapid returns.

Here's some stats on Wedding Channel.
110 employees
Investors include some well known names: Amazon, Federated, Goldman Sachs, Kleiner Perkins (of Google fame)
$46.5M invested in the company to date, last in 2000 (makes a $50M buyout less likely).
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