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Newegg finally goes public, with financial analysts expecting big things

Online retailer Newegg today announced plans to go public, filing for a $175 million IPO, according to an SEC filing.

Newegg is best known as a technology e-tailer, but has expanded of late to include other consumer electronics.  Since launching in 2001, the company has been profitable every year, with $2.1 billion in sales in 2008.  In 2007, the company saw $1.9 billion in sales, with the number expected to increase as Newegg expands its business.

The company has seen dramatic success after making changes to support small- and medium-sized businesses in the United States.  Newegg also has its sights outside the United States, with China expected to be an important step in the company's continued expansion.  Furthermore, Canada also is expected to be a big market for Newegg, with many Canadians long requesting to be able to make purchases from the site.

The company does have to deal with several issues in the immediate future, including a patent infringement lawsuit filed by Soverain Software, according to the IPO registration filing.  If Soverain is successful in getting an injunction against Newegg, the company may be forced to "stop or alter certain of our business activities."

In the future, Circuit City -- although its physical stores went bankrupt, a liquidator purchased the company's online business and keeps it running -- will lead the charge of online businesses that aim to derail Newegg.

The IPO will be handled by Citi, JP Morgan, and the Bank of America, with Newegg's largest shareholder, Insight Venture Partners, also completing another IPO earlier in the year.

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RE: mixed feelings
By ChristopherO on 9/29/2009 1:50:02 PM , Rating: 3
Are the warehouses subcontracted somehow?

Some are. They are direct shipped from some of their distributors. The transaction is basically, "Here Ingram, you need to send a book to this guy over here, we don't care how you do it." That's why some Amazon labels are fairly inconsistent. Inconsistent label-stock is usually a giveaway that it's an outsourced warehouse.

Technically most states require you to pay sales tax on all Internet transactions. You typically need to declare the amount on your yearly tax forms. However, the state would never know unless they subpoena every e-tailer for your records to discover the shipping address for your orders. I think it's one of those gray areas that the US Supreme Court hasn't addressed unambiguously (but seems to side with the states).

I pay the tax because I buy enough things on line that if I ever got audited it would be an obvious problem... Especially since Turbo Tax has a large screen that asks, "Did you buy anything on the Internet?" Pretty hard to claim ignorance when the state already knows you e-filed via Turbo Tax.

Amazon is my favorite store, but in fairness to the states, Amazon does sort of rely on people skipping these taxes. If anything it only seems fair to tax the origination state, and not the destination... That would also encourage states to offer tax-incentives to lure new companies.

The tax system is so backwards it makes me ill.

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