Tuesday Report - August 14, 2001

Tradaq Acquires Leading UK Competitor MRI B2B

Tradaq, formerly BarterTrust, has acquired MRI B2B, one of the United Kingdom's leading trade exchanges. The acquisition adds 350 members to their trading network.

"With this acquisition Tradaq continues in its consolidation of the international trade exchange market, and gives us a firm foothold in Europe," exclaimed Philip Letts, President and CEO of Tradaq.

Tradaq views Europe as a key growth market for trade exchanges, and plans to consolidate the European market through a combination of acquisition and internal growth. The company maintains offices in the U.S., Canada, Mexico, Brazil, and the United Kingdom.

Online Real Estate Services Dominant Player Leveraged Barter To Build Position In The Marketplace

Homestore.com has the largest market cap ($2.9 billion) and is the acknowledged dominant player in the growing niche for online real estate services. Their big advantage is an extensive database of home listings, obtained through an exclusive partnership with the National Association of Realtors.

(Cendant Corp., owner of the Century 21, Coldwell Banker, and ERA real-estate franchises, is a major customer and holds nearly 17% of Homestore's outstanding shares.)

Pushing Homestore to the forefront is an aggressive marketing effort. The company's web sites, including Homestore.com and Realtor.com, attracted 7.2 million visitors in June—considerably more than the 2.9 million visitors at the No. 2 real-estate site, HomeAdvisor.com, run by Microsoft.

Barter has played its role in the marketing effort as Homestore uses its "currency," trading 3.9 million shares of Homestore stock (valued at $189.8 million) to AOL for a five-year deal to create an internet "channel" for AOL subscribers that shows homes for sale.

Another barter effort saw Homestore trade 1.1 million shares ($70 million value at the time) to Budget Group, the auto and truck-rental concern, as part of a 10-year promotional agreement that put Homestore.com on the side, of every Ryder truck.

Weinberger and Sculley Optimistic At DM Summit

Keynote speakers Caspar W. Weinberger, Forbes magazine chairman, former defense secretary under President Reagan, and chairman of the Federal Trade Commission under President Nixon, said that even though the U.S. economy is slow, conditions are still quite good.

And, he added that the stock market is a bad indicator of economic conditions. He urged the attendees at the Direct Media 2001 Client Summit in White Plains (NY) this summer not to ignore politics, saying the current administration is friendly to business.

Meanwhile, John Sculley, co-founder of private investment firm Sculley Bros., said that despite the dot-com meltdown the Internet is still revolutionizing how business is done.

In his luncheon keynote, Sculley, former chairman/CEO of Apple Computer and former president/CEO of PepsiCo, advised marketers that the Internet's best uses were still being figured out.

Still, he said, marketers have to realize that consumers have taken the control away from businesses, and they expect top-notch services and products with competitive prices and fast delivery.

2DoTrade is a commerce-to-commerce provider of market information, trade facilities, financing, and related business services in the African marketplace. They recently announced a transaction of $25 million to move Sierra Leone (West Africa) tropical hardwood to furniture manufacturers in China, India, Italy, Pakistan, and Vietnam.
They also expect to export hardwood products from Ghana, Cameroon, and Congo with some of the company's transactions involving barter agreements with rice producing countries.
The Small Business Survival Committee contends that the top seven states "most entrepreneur friendly" all have one thing in common—no personal income tax. And the least friendly, in contrast, have some of the highest personal income-tax rates. The top seven states are: Nevada, South Dakota, Washington, Wyoming, and Florida.
A struggling provider of high-speed internet access, Covad Communications Group, has made a landmark move by striking a barter-type deal with its bondholders to retire $1.4 billion of debt.

In a prenegotiated Chapter 11 bankruptcy-law filing they negotiated to provide the bondholders just 19 cents in cash, with the balance in preferred stock which can be converted into a 15% equity stake.
The buying and selling of used construction, mining, and transportation equipment is assumed to be a $100 billion industry worldwide.

Assetline.com, an online exchange and auction site whose objective is to make trading in construction equipment more transparent and efficient, plans to capture at least 1% of the market. They recently finalized strategic alliances in Germany and Saudi Arabia.
GE Capital, desiring to move into the small and medium-size loan business, has acquired Heller Financial Inc.
A new book, The Coming Collapse of China, written by Gordon Chang who works in Shanghai for an American law firm, contends that when the coveted Olympic Games roll into Beijing in 2008 the People's Republic will be gone...swept into the dustbin of history.

China's upcoming membership in the World Trade Organization spells the collapse of the Communist Party, Chang suggests, as joining the WTO will force real competition for the first time in China.

And the state-owned enterprises (SOEs), some 110,000 of them, will falter, as for the most part they're not only eating up about 70% of domestic lending, but they're unproductive with about 30% of their workers idle and many of them actually bankrupt.
Romania is trading 300,000 tons of wheat to Russia for ore and natural gas. And, the Bosnian Serb government will barter an unspecified quantity of electricity to Serbia for 40,000 tons of high-quality wheat.
In 1996 8% of banner ads were clicked on, now it's under 1% according to the Internet Advertising Bureau.