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Thursday, September 07, 2006

AutoByTel: Just When You Thought It Couldn’t Go Lower (ABTL)

For the last 22 months, AutoByTel has had an extraordinary record of driving its stock almost straight down. It has now moved from $10 to $2.60 over the period and trades at a 52-week low.

The company recently appointed new outside auditor and reported a drop in revenue for the quarter ending June 30. The topline was down from $31.4 million to $29.4 million. The company’s operating loss went from $3.5 million to $8.4 million.

The online car buying field is getting crowded. The car companies themselves have created websites that are almost exclusively designed to get the visitor to a salesman.
Large companies like Gannett and The Tribune Company have banded together to build sites like as the classified business from their newspapers moves online.

According to comScore, visits to one of the larges car buying sites AutoTrader, rose 14% in July compared to the same month last year. AutoTrader hit 6.4 million unique visitors. It ranked third among all online classified site behind Craigslist and Trader Publishing. Right behind AutoTrader was with 4.5 million unique visitors.

At this point, even eBay sells cars online. Kelly Blue Book, a large online car information site says that its traffic hit an all-time high with 13.2 million visitors in August.

AutoByTel’s problem is not that online auto purchasing is static. But, there are now too many sites doing the same thing. In 1999, when the stock was at $50, this was not true. But, this is 2006, and there are a lot of well-heeled folks chasing car sales online.

That would seem to spell an end to AutoByTel’s chances of improving revenue or making a profit.

Douglas A. McIntyre can be reached at He does not own shares in companies that he writes about.

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