GenesisIntermedia.com Ends Year With Share Price Up 195%
GenesisIntermedia.com finished 2000 as the top gainer among publicly traded San Fernando Valley businesses, with its stock surging 195% on the year, to close Dec. 29 at $17.13.
The company generates most of its revenue selling consumer goods--including health and fitness products and self-help materials--via infomercials and direct telemarketing campaigns, said Robert Bleckman, director of investor relations for the company.
Bleckman said the company is putting most of its energy into a new venture to provide free Internet access and advertising at mall kiosks. The company operates these kiosks, through its Centerlinq system, in 32 malls around the U.S., Bleckman said.
The program has been costly. In a recent issue of Barron’s, the company was ranked No. 1 among 339 dot-com companies that “burned” through more cash than they took in.
In its most recent financial filing, the company reported a loss of $4.2 million for the quarter ended Sept. 30, compared with a loss of $2.3 million for the like quarter in 1999.
Bleckman attributed the losses and the high “burn rate” to the company’s expansion of the Centerlinq informational kiosk system.
“It’s an investment we need to make,” Bleckman said. “We anticipate [reaching a] break-even point in the third quarter 2001, where we can sustain our initial investment.”
In a Securities and Exchange Commission filing last week, it was disclosed that Saudi financier and arms dealer Adnan Kashoggi had acquired a 33% stake in GenesisIntermedia through his Bermuda-based holding company, Ultimate Holdings Ltd.
GenesisIntermedia Chief Executive Ramy El-Batrawi told Bloomberg News that he has worked with Kashoggi on deals dating back to 1988 and speaks with him “almost every day.”
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The company has kept a low profile through most of its existence, which may have helped it as dot-com stocks tumbled this year, said Rohit Shukla, vice president of the Los Angeles Board of Information Technology Commissioners.
“There is a virtue to toiling in relative obscurity and that definitely applies here,” said Shukla, adding that because it is closely held, GenesisIntermedia “was more insulated from the vicissitudes of the market.”
The company, founded in 1993, has been at its current Van Nuys location since fall 1999. There are 250 employees at company headquarters and 150 at a telemarketing center in Utah.
“We like to maintain a low-key approach for a number of reasons,” Bleckman said. “Mainly, because we let our work and products speak for themselves. The stock price has maintained its stability, while others have lost their values.”
Last month, the company announced an offer to pay $49.1 million in cash and stock to acquire full ownership of Fashionmall.com, in which it already has a 7% stake.
Fashionmall.com, an online “mall” for lines of designer clothing, is evaluating the offer.
