Buy.com Adds Wireless Line

In a bid to expand its presence in the burgeoning wireless market, e-commerce portal Buy.com (Nasdaq: BUYX) is purchasing wireless e-tailer Telstreet.com for about $7.9 million (US$) in stock.

The Aliso Viejo, California-based company says the acquisition will add a new product category to its Web site, which currently offers computer products, software, consumer electronics, books, music, videos and DVDs, games, golf and travel items.

Expanding Market

The acquisition of Telstreet is not Buy.com’s first foray into the wireless market. Earlier this year, the global company — which operates virtual stores in the United States, Australia, Great Britain, and Canada — announced its entry into the Australian wireless market.

A recent report by Forrester Research predicts that the combination of skyrocketing penetration rates, the mobile Internet, and stimulated voice-calling will propel wireless revenues $42.6 billion in 1999 to $101.2 billion in 2005.

Additionally, a report by Merrill Lynch predicts the number of wireless subscribers worldwide will increase from 425 million in 1999 to 953 million in 2003.

Inside the Deal

To consummate the deal, Buy.com will issue approximately 1.6 million shares of common stock, subject to downward adjustment in certain circumstances, in exchange for all outstanding capital stock and options of the Indianapolis, Indiana-based Telstreet.

Launched just last year, Telstreet sells wireless phones and accessories and offers wireless service through companies that include AT&T, Sprint PCS, and GTE.

Buy.com’s Slump

Having launched as BUYCOMP.COM in October 1996, Buy.com is one of the granddaddies of e-commerce, but the company has had its share of problems recently. When Buy.com went public in February of this year, its stock was issued at a price of $13 per share. Unfortunately, after peaking on opening day at 35 7/16, the company’s stock began a rapid downward spiral and is currently trading at 4 7/8.

In the first quarter of this year, the company posted losses of $32.9 million or $0.28 per share. That compares to $19.3 million or $0.22 per share during the first quarter of 1999. The company has been posting losses since its founding.

In May, Forrester Research placed Buy.com on a list of companies that it believed would run out of cash before the end of the year.

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