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Dealer Info archief

jaargang 12, nummer 11, 2002

23 augustus, 2002

Comdex, too, has problems

The big news about the Comdex Fall this year is that there is going to be one. Going to Vegas?
You may not think that's news, but that was before the stock price of the Key3Media Group (Comdex's owner) fell from about $ 10 to about four cents and it was delisted (dropped) by the New York Stock Exchange. At the same time, Key3Media announced that it was reviewing all its operations - but would continue to produce all its major events, such as Comdex.
Smaller, again
And the public is still expected to show up - although there remains some question about the vendors.
Eric Grodziski, Key3Media spokesman, said about 1,000 companies are expected to exhibit. That compares to 1,500 last year, a figure that itself was painfully down from the 2,000 or so of the previous two years. And this year's thousand-company figure is a projection, he said in early August, rather than an actual count. Many firms seem to be delaying their decision until the last minute, but from the commitments received to then, 1,000 seemed to be a conservative estimate, he indicated.
But, based on the rate of registration, Key3Media expects that the number of attendees will be about the same as last year, or about 125,000. In comparison to the exhibitor total, that figure is reassuring, But last year, 125,000 was considered shocking, jus after speyt. 11th, since the previous year was marked by attendance of more than 200,000.
'People are going to fewer conferences, but they are being more selective, and reserving a trip to Comdex,' Grodziski said.
Of course, a smaller crowd means that hour-long lines for taxis are no longer the norm, so many attendees last year seemed philosophical about the turnout. Also, the whole tradeshow fit into one hall at the Las Vegas Convention Center, so they did not have to take bus rides to 'satellite sites' at hotel/casinos throughout the city. (And while it used to be that you had to reserve your Comdex hotel room six months in advance, that has not been the case for at least the last five years, thanks to the construction of a long list of new, huge hotel/casinos.)
The fall of Key3Media's stock price, meanwhile, was apparently not related to any collapse of investor confidence in Comdex itself. The stock had fallen from about $10 to about $5 during the previous six months as the company announced disappointing financial results. What appeared to trigger the collapse was an announcement in May that the company would probably be in violation of 'covenants' of a loan agreement involving operating funds it had borrowed. Such covenants often involve a promise that the borrower will meet specific financial goals, and the bank can call the loan if the covenants are violated. Key3Media, in fact, renegotiated the loan before it ever actually violated the covenants.
In the meantime, though, the four-cent price of the stock (still traded over the counter) meant that Key3Media was worth (with 68.3 million shares outstanding) only $2,732,000. Compare that price to the $860 million that Comdex founder Sheldon Adelson got when he sold the trade show to Softbank Corp. in 1995. Adelson later used his money to build the new Venetian hotel/casino in Las Vegas. Softbank later acquired the trade shows run by Ziff Davis and, combined with Comdex, spun them off as Key3Media. (Meanwhile, Key3Media stock has risen since hitting the four-cent bottom.)
Comdex's problem - and the problem of any other trade show that concentrates on a single industry - is that its fate mirrors the fate of the industry it covers, explained Michael Hughes, research director at Tradeshow Week in Las Angeles. A lot of computer firms have been having problems and Comdex cannot expect to remain immune, he indicated. But an additional problem that is specific to Comdex is that it is receiving more and more competition from the Consumer Electronic Show (CES), which takes place in January and includes consumer items like TVs, stereos, and cameras, as well as computers. The most recent CES did not experience the dramatic drop in attendance that Comdex experienced, even though it took place only a few weeks later.
'If you want to go to a trade show, you might as well wait until CES, when there is more stuff on display, and which takes place at a quieter time,' noted Rob Enderle, analyst at the Giga Information Group, a market research firm in Cambridge, MA. 'Comdex generally has products that have already been announced, making it a show for end users. CES generally shows products that have not been released, making it a show for professional buyers. At Comdex, it is too late to order products for Christmas, and the vendors don't want to talk about the next generation until Christmas is over. So Comdex is odd man out. Originally, both shows were for professional buyers, but Comdex did not adjust.'
But Tim Bajarin, president of Creative Strategies, a market research firm, countered that Comdex is important for major buyers who need to work on purchase decisions for the next year at the end of the current year.
But Comdex is not likely to go away, said Hughes at Tradeshow Week. 'It remains the predominate trade show of the information technology industry,' he noted.

Lamont Wood

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