Company
Enable Holdings Inc.
8725 W. Higgins Rd.
Chicago IL 60631
Phone: (773) 272-5000
Fax: (773) 272-4030
www.ubid.com
Contact
Tony Schor, Investor Awareness Inc.
Phone: (847) 945-2222
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Share Data
Symbol: (OTCBB:ENAB)
52-Week Price Range: $0.51 - 2.35
Shares Outstanding: 18.20 million
Market Cap: $37.3 million
Balance Sheet Data
(MRQ)
Total Assets: $14.96 million
Total Liablilities: $6.38 million
Shareholders’ Equity: $8.5 million
Total Debt: $2.03 million
Book Value per Share: $0.47
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The recent downturn in the economy has consumers looking for unique buying options to stretch their hard-earned dollars. The economy also has major retailers looking for an outlet to help relieve problems with excess inventory created by diminishing consumer demand and overproduction.
Conditions are favorable for a company with the ability to alleviate the excess inventory problems of major retailers and also offer consumers quality brand-name merchandise at prices far below retail.
Enable Holdings Co. (OTCBB: ENAB), formerly uBid Holdings Inc., has spent the past 10 years building relationships with top brands in order to offer consumers an innovative bidding platform for computers, electronics, jewelry, home goods, apparel, and more. Much of its inventory is acquired through asset recovery and liquidation.
Jeff Hoffman joined the company as president and CEO in 2007. A veteran of the industry, Hoffman previously worked in online auctions, retail, software, and entertainment. “I was brought in to take this company to the next level and reach its full potential,” Hoffman says. “Put simply, the company realized that it needed to create a new business model.”
The company plans to use its new five-channel selling solution through the following entities: uBid.com, the existing business-to-consumer auction site; Dibu Trading, an existing business-to-business trading and wholesale division; RedTag.com, a fixed-price sister to uBid that will soon be online; RedTag Live, an off-line sales division focused on liquidation and tent sales; and a fifth division, not yet named, that will function as an enterprise commerce software service.
“We’ve spent $40 million over 10 years on our technology, so we want to be able to license it to non-competing companies,” says Hoffman of the online commerce solutions service that will be available by late 2008. “We already have several clients that want to use our technology to run their own controlled private auctions.”
In creating its new business model, Enable Holdings elected to close its Bidville.com division, a consumer-to-consumer auction site that it purchased a few years ago. “Bidville was our last involvement in the consumer-to-consumer space,” Hoffman says. “It was never the right fit for a company like ours, so I made the decision to divest it. It’s not part of our internal skill set to serve the consumer-to-consumer market.”
The company has also been making some deeper internal changes, such as upgrading back-end systems and procedures; reorganizing departments; creating a risk, reporting and analysis center to oversee performance management; improving technology; investing in new geographical and vertical growth markets; and redesigning its website.
Another significant step in the restructuring process was to conduct more rigid and detailed financial analysis, which has allowed the company to remove business segments that aren’t profitable and begin focusing on segments that are.
It’s now focused on asset recovery solutions for brand-name manufacturers, distributors, and retailers that need help with the sale of merchandise that is new, overstocked, closeout, refurbished, or limited supply. “It’s important to understand that we don’t directly compete with eBay or other consumer auction sites,” Hoffman says. “Those are consumer-to-consumer sites. We work for the sellers.”
Enable Holdings considers inventory solutions to be its business niche. “The businesses we work for refer to it as ‘asset recovery,’” Hoffman says. “We exist because production and sales are never perfectly forecast. Whether we’re in a good economy or a struggling one, there is always excess inventory.”
Until recently, more than 50% of Enable’s business came from four companies: Hewlett-Packard, Always at Market, recoupIT, and Sony. This presented some risk exposure. “Since we introduced our new business model, we have been signing quite a few more new brand names,” Hoffman says. New clients include Polaroid, Samsung, IBM, Nikon, Fuji, Casio, Panasonic, Gateway, Seiko, Black & Decker, Honeywell, KitchenAid, Canon, Epson, Fujitsu, JVC, Philips, and Westinghouse.
“Now that we’ve expanded our model and identified ourselves as an inventory solutions company, a lot more companies have come to us because they need an asset recovery partner,” Hoffman says. The company has begun partnering with numerous support companies, including Microsoft Dynamics, Hill & Knowlton, Dotomi, AdByNet, Channel Intelligence, Omniture, Digital Dialogue, and ExactTarget. This will enable the company to more easily facilitate international shipping, public relations, advertising, online optimization, marketing, and other endeavors.
Under its new strategies and partnerships, Enable’s stock price has more than quadrupled since April.
Hoffman considers the company’s main competitors to be Overstock.com and Liquidity Services, companies whose names make clear their business plans. This presents a branding and identity challenge for Enable Holdings on the buyer side. “The solution is to create a common theme,” Hoffman says. “We want to help consumers understand the value proposition across all our sites.” The company is testing a number of advertising channels to determine which are the most cost-effective.
However, on the seller side, branding is not a problem, and Hoffman expects this to continue to fuel the company’s growth. “They know who we are and what we do,” he says. “In fact, all our new sales channels are based on the positive feedback we’ve received from sellers.”
RISKS: There is no guarantee that the company’s new business models will increase exposure and profitability. Also, online business is especially vulnerable to economic slowdowns and decreases in consumer spending.
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