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Has anyone got any thoughts on this one as it looks pretty cheap on fundamentals but I have no idea what the future of domain registries holds.

The numbers as I see it.

50m shares on issue @ 70c = $35m mkt cap
Cash in the bank = $16m
EBIT for the year over $4m and cash flow positive

So according to this you can buy one of the largest domain registry businesses for $19m or less than 5 times EBIT. That's over a 20% return if there's a future for this type of business.

A few months ago you could have effectively bought the business for nothing as the market cap = cash in the bank

I wonder what people were thinking when they paid $17 per share for this business when it was generating less than $2m EBIT. ie they were paying 400 times EBIT!!

Interested to hear your comments (has to be before the 14th though)

Regards
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Having the right to issue domain names is like having a license to print money. So where in the world does MLB get the right to issue domain names? Does MLB pay for this right? Can it be taken away?

Important questions that I will not be answering authoritively.

In any case, MLB will and is facing more competition. Originally it was the only registrar in Australia, but as of last year the market was opened up to competition.

I registered my domain name at http://www.clickngo.com.au for AUD$33. MLB charges AUD$69.30. Internationally MLB charges US$35, other discount registrars charge US$11.95.

MLB is more than just domain names and describes itself as a global player this is how it describes it self, "Melbourne IT Ltd is a leading supplier of domain names and related services to the global market." How much these "related services" add to the bottom line I don't know.

The way I see it, MLB charges premium prices and attracts customers through prominent advertising and partnerships. This is not unlike the US based Network Solutions Inc (http://www.nsi.com) which is owned by VeriSign. Initially I had paid them $US70 (approx. $AUD130) for my 1 year registration. 3 months ago they were still asking for that amount. Today I see "Limited Time Offer $29" on their home page.

I would have never of known about Click'N'Go if they hadn't snail-mailed me directly. They would not have done that if I didn't already have a registered domain name registered to an Australian postal address. (I should thank them for going to the expense and not being an e-mail spammer.)

So, it's likely smaller registrars at the budget end of the market won't attract as many first time domain name owners because they don't have the advertising budget and a "big" internet shop front. In the short term MLB will benefit from the growth in domain names. In the long term, it will be important to see if MLB can hold on to customers and make them renew their domain name registrations and purchase additional services.
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Thank you very much for your info.

It begs the question if they are charging over twice the price of other providers they must have something that others don't offer, and is that their competitive advantage?

But in the "what can go wrong on this?" question if they are ever called onto engage in a price war then they would rack up losess pretty quickly and easily given their EBIT margin could not sustain a 50% fall in revenues. Not knowing anything about management this makes me very cautious about this one. Will put it in the watch and see basket.

Regards
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