Hughes Network Systems of the US is acquiring 15% of the equity in S Kumars.com at the price of Rs 685 which is 50% more than the current market price of the company.
Skumars.com which was incorporated in May 1999 by the Kasliwal group is seeking to increase its presence by setting up a chain of franchisees all over the country that will engage in business to business and business to consumer type of transactions.
The excellent valuations for the company heralds the beginning of the dot com boom in the true sense. Several enterprising persons who have given up lucrative jobs to either set up dot com companies or join them can take heart from the excellent response the issue has evoked.
It will also encourage more and more dot coms to tap the capital markets for funding setting up and expansion plans. This is because following the crash of several dot com companies on the NASDAQ, venture capitalists have become exceedingly discerning and reluctant investors.
Dot com companies need to be more focused on revenue models rather than such trivials as eyeballs and page views. They also need to trim down on ad spends and concentrate more on bandwidth, better connectivity and better content. Given the plethora of companies that have been mushrooming in the recent months, it is only a select few that will survive the dot com jungle. This is because the penetration levels of the Internet are pegged only at 1 million accounts.
Due to the entry of private internet service providers, there has been a price war in the internet field and rates have come down by as much as 50%. The subscribers will definitely benefit from this and their numbers are expected to grow considerably.
Thus overall the present development augurs well for dot com companies as it reveals a good appetite by the Indian capital markets for dot com paper.
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