We hate Buy.com. Here’s why: CEO Scott Blum has announced that he is looking to take the company public for the second time. In the bubble, Buy.com had a nice IPO despite huge losses and negative margins. Investors might have liked the company’s growth rate and cash-in-the-bank but that was thanks to a grandiose $225M investment that Softbank made in Buy.com. Readers may recall that Buy.com ‘business model’ was to sell items for less than what they paid for them – ahh the bubble.
Thanks to financial malfeasance committed by Blum, he was considered something of a pariah and Merrill Lynch indicated that it would only take the company public if Blum left. Soon enough, after the IPO, the markets learned that Buy.com had no business model and management was creepy so the stock tanked with plenty of ensuing layoffs. Blum was living the fat life in his Laguna Beach mansion and saw opportunity in others’ misfortune. 18 months after the IPO, Blum bought back Buy.com for $23M at $0.17 per share, down from its high of $35 and a $3B market cap.
Now here Blum is trying to take the company public, again with Buy.com reporting heavy losses. Will this recurring nightmare end?
Blum With Rocker Buddy Tommy Lee
Back before there was a Buy.com, we learned what a weasel this Blum is. A buy-side investment manager tipped us off to the fact that the publicly traded company that Blum’s parents managed – Pinnacle Micro – was siphoning money out in order to finance their son’s entrepreneurship, in addition to other financial irregularities. When we ran the story in the Red Herring the whole god-awful Blum family got on the phone to cry a river and threaten law-suits.
If any of our readers want a piece in in this deal – the underwriters are RBC Capital Markets, Thomas Weisel Partners and Pacific Crest Securities – we urge you to think twice. A new Buy.com sends the wrong message and will just stink up the neighborhood.
Read – Founder To Buy Back Buy.com (e-Commerce News)
Read – Buy.com plans $86.3 million IPO
Online retailer will use proceeds for tech upgrades, marketing and to pay back CEO (CNN)