E-Commerce Stocks: Uniglobe Travel Online - Investing (Canada): 4/1/1999

The other day I was browsing through MiningCo.com and came across a banner ad for Uniglobe Travel Online. Clicking it brought you to its website, a slick, professional and highly navigable site that let's you research and book travel online. Checking it out a little further reveals that the company has over 1000 independently owned and operated franchise offices in ten different countries to serve you. All prices are in US dollars and it's corporate office is located in Renton, Washington.

Anything this slick, this polished, this professional has got to be American, right? Wrong! This baby's Canadian and trades on the Vancouver Stock Exchange. Although it has an American mailing address, its head office is in Vancouver.

Yesterday Uniglobe released its year-end financial results for 1998. The numbers are impressive as shown in the summary below:

	1998	1997
Gross Travel Bookings	C$10,440,647	C$711,337
Revenues	C$580,266	C$179,830
Net Loss	C$1,691,260	C$2,019,762
Loss per share	C$0.10	C$0.15

Although bookings increased more than ten-fold and revenues more than tripled, the loss per share declined only a third. While this may not seem very good, the company says this "reflects(s) upgraded investment decisions to fuel further growth". And it has been a successful strategy. Think of online travel and you think of Uniglobe.

Its strategic partnerships include Microsoft Expedia, Yahoo!, Galileo International, Autobytel.com, Internet Travel Network and Leisure Planet.

Although revenues are small compared to conventional travel agencies - its major shareholder Uniglobe Travel (International) Inc. boasts C$2.8 billion in 1998 bookings compared to Uniglobe Online's C$10 million - this is not unusual for a neophyte marketplace like the Internet. Amazon.com's sales are miniscule compared to Barnes & Noble's storefront bookstore sales.

It is the potential of this medium that interests investors. Chatting with business analyst Michael Campbell recently, I likened the Internet to the invention of television. No, said Campbell. It's more like the invention of electricity. And I think he's right. The potential of Uniglobe fils (if I might call the Online Uniglobe that) is to surpass the C$2.8 billion bookings of Uniglobe père! In fact, projections predict online travel bookings will reach $10 - $15 billion US by 2002. In fact, January bookings were double its December bookings and December is a high travel month.

The stock has not suffered from the financial losses. It was priced at $2.05 on January 1st and closed at $5.25 last Friday, a gain of 156.1%. Its low over the past year is $0.45 and although it is only trading at about half of its year high of $10.65, the stock is still 1066.6% above its low.

The only other online travel agency I could find was Preview Travel which has strategic alliances with America Online, Excite, Lycos and USA Today. Preview has significantly higher bookings than Uniglobe, but Uniglobe is growing at a significantly faster pace. With a potential $15 billion industry, there is plenty of room for both companies to grow.

I expect that Uniglobe will probably move to the TSE and then to the NASDAQ within the next few years.

The Canadian Internet Stock Average

Yesterday I got an email from Lance Laifer, President of Planetclick, Inc., to let me know that my "Canadian Internet Stock Index page is currently being featured at planetclick as a must click and that it was inputted into our database with an intial rating of 10." Don't know how often they change their Must Click links but check out the site anyway. It's an interesting concept.

One of the most popular sites on the Internet for those following Internet stocks is Internet.com, the site that hosts Internet expert Steve Harmon's daily Internet Stock Report. Steve was also the creator of the Internet Stock Index which has become the standard for measuring Intenet stock activity. But ISDEX® as it's called, does not include any Canadian or other foreign stocks. And so I have created the Canadian Internet Stock Average (or CISA) to rectify this situation.

But there are some important differences between the two. ISDEX includes 50 representative Internet stocks from a variety of categories. The stocks are weighted according to market cap with a ceiling of 10% for any particular stock. ISDEX is also a pure Internet index. To qualify for inclusion, a company must derive 51% or more of its revenue from Internet related activities. This presents the anomalie of a company like Microsoft, which has a huge influence and presence on the Net not being represented at all on the Index, while many smaller companies with a lesser Net presence than Microsoft are included.

Because there are so many U.S. companies that qualify, Harmon can do this. And it has a certain logic, in spite of the anomalies. But we would be hard pressed to find 50 Canadian companies with any Internet presence, let alone ones that garner 51% or more of their revenues from the Net. And so we are considering all companies that have a considerable Internet presence even if they derive most of their revenues from other sources such as newspapers or cable television.

I'll be categorizing my list somewhat differently as it progresses because of the inclusion of companies that are not pure plays. Cable companies providing Internet cable access, and telephone companies that are part of the Sympatico consortium will have their own categories. Additionally I will spin off financial content from regular news and information content, simply because there are so many financial websites. Online brokers will be a separate category. And security will be included with software. So my category list will be:

Right now I just have ten stocks listed and have not broken them into categories. As the list grows, they will be differentiated. They will also be treated as sub-indexes with their own sub-index performance rating.

The Canadian Internet Stock Average

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