Bob Jensen's Threads on e-Commerce

Bob Jensen at Trinity University

Bob Jensen's evolving workshop on electronic business can be found at

How E-commerce Works --- 

Revenue Recognition Accounting Fraud (much of this fraud is in ecommerce) ---

Opportunities of E-Business Assurance:  Risks in Assuring Risk

Bob Jensen's Threads on Return on Business Valuation, Business Combinations, 
Investment (ROI), and Pro Forma Financial Reporting

Accounting Fraud, Forensic Accounting, Securities Fraud, and White Collar Crime

How Can Technology be Used to reduce Fraud? ---

A Special Section on Computer and Networking Security  --- 

Threads on Firewalls

Bob Jensen's Technology Glossary

Bob Jensen's Accounting Educator Helpers  

Search for Internet, e-Commerce, or e-Business Phrases 

e-Business and e-Commerce Data --- 

Web data and statistics
CyberAtlas --- 

This is what Professor Jim Mahar says about ERisk in the March 24, 2003 edition of TheFinanceProfessor (an absolutely fabulous newsletter) --- I simply love the site. I know it has been site of the week before, but it is so good, it earned it again. Try it, you’ll love the case studies and the newsletter!

ERisk --- 

ERisk is the leading provider of strategic solutions for risk and capital management. We deliver a unique combination of world-class analytics for risk-based capital, strategic risk management expertise, risk transfer advice and risk information.

You can find out more about our products and services in the Overview section. On this page, you can find out more about the people and ideas that power our company.

The ERisk Report --- 

The ERisk Report is a concise monthly briefing for senior financial executives. Every month, contributors from ERisk's team of risk management experts address today's most pressing issues in strategic risk and capital management. Sign up today for your personal copy of this cutting-edge publication!

Vol 1.6: Measuring the return on risk management; leveraging the economic benefits of risk management

Vol 1.5: Putting the real value on customer relationships; rolling out risk management

Vol 1.4: Making risk more transparent; fed takes pulse of economic capital practices

Vol 1.3: Credit scoring: robots versus humans; James Lam's three lessons from Enron

Vol 1.2: Weathering credit losses; regulators line up behind economic capital

Vol 1.1: Revamping your credit ratings system; measuring bank profitability

The ERisk Portal --- 
Resources for Enterprise Risk Management

ERisk today continues to successfully develop and install its analytics at client sites, conduct high-value consulting engagements, offer unbiased advice on risk transfer alternatives, and attract thousands of readers to the ERisk portal.


Check out the top ten trends for 2003 with quotes from luminaries such as the creator of Dilbert, the CTO of GM, authors of top business books and executives from companies such as: HP, Cable & Wireless, CSC, Salesforce, Nielsen/Netratings, Bowstreet, divine, Zapthink and Infravio: 

Top ten trends for 2003 --- 

Top level news stories via the lenses of the Value Framework(tm) --- 


From Information Week on December 17, 2001

2001 Winners And Losers

Let's cut to the chase (and you can read all their profiles online), who were this year's winners and losers? Here's our take:

Losers: Sun Microsystems, network service providers (E.spire, NorthPoint and WinStar, among others), networking providers (Cisco, Lucent, Nortel), Compaq, pure-play supply chain firms (Manugistics, i2), Nike, Enron, and content-only Web sites.

Winners: SAP, PeopleSoft, Microsoft .Net, IBM, Fidelity, EDS,, TechData,, eBay.

Let the arguments begin. Read the whole package online: 

Plus, how did our 2000 predictions fare? 





GAAP = Generally Accepted Accounting Principles (including rules, laws, and conventional practices)

The other lesson, perhaps even more important, is contained in the embrace of GAAP. When the intellectual achievements of the 20th century are tallied, GAAP should be on everyone's Top 10 list. The idea of GAAP -- so simple yet so radical -- is that there should be a standard way of accounting for profit and loss in public businesses, allowing investors to see how a public company manages its money. This transparency is what allows investors to compare businesses as different as McDonald's, IBM and Tupperware, and it makes U.S. markets the envy of the world.
Clay Shirky in "How Priceline Became A Real Business," The Wall Street Journal, August 13, 2001

"How Priceline Became A Real Business," by Clay Shirky, The Wall Street Journal, August 13, 2001

There are two vital lessons here for anyone trying to make money on the Internet.

The first is that Priceline didn't succeed until it decided to become a real business. Priceline was originally touted as a proof-of-concept company for Walker Digital, a privately held firm whose sole product is business-model patents. Priceline's exploding market cap quickly led it away from its focus on plane tickets into gasoline, groceries and even yard sales.

Priceline's recent profit was largely achieved by reversing all of that conceptual work with layoffs and restructuring, all designed around such old-fashioned goals as bringing spending in line with revenues and focusing on its core business of selling airline tickets.

The Internet's most significant attribute is its relentless lowering of the cost of gathering and using information. This makes the Internet fundamentally deflationary, and the only sure way to use this deflation to your advantage is to target someone else's high-margin business. Given its high prices, air travel was a perfect target for Priceline, while trying to manipulate the margins of groceries, gas and yard sales turned out to be a huge distraction.

The other lesson, perhaps even more important, is contained in the embrace of GAAP. When the intellectual achievements of the 20th century are tallied, GAAP should be on everyone's Top 10 list. The idea of GAAP -- so simple yet so radical -- is that there should be a standard way of accounting for profit and loss in public businesses, allowing investors to see how a public company manages its money. This transparency is what allows investors to compare businesses as different as McDonald's, IBM and Tupperware, and it makes U.S. markets the envy of the world.

Internet businesses worked hard to avoid GAAP, because GAAP might suggest that it would take years of hard work and focus to turn a profit. Instead, we saw dot-coms reporting revenue from gross rather than net sales (a trick Priceline once used); revenue from barter deals (often used by advertising-dependant companies like StarMedia and SportsLine); and even revenue from the future (MicroStrategy's stock fell over 60% in a single day when it announced that it had been recognizing millions in income before it had invoiced its clients).

It's too early to tell what Priceline's second-quarter profit says about its long-term prospects, much less about the Internet sector as a whole, but three cheers for Priceline anyway for embracing a virtuous circle of executing on its core business and reporting the results using GAAP. We can only hope that its newly found discipline will be widely copied by the Internet sector as a whole. Only when that happens will investors finally be able to sort the real businesses from the illusory ones.

Bob Jensen's Documents on Accounting Theory can be found at 

There's More to E-Commerce Than Online Profits 
A lack of profits was probably the biggest reason why the Internet bubble burst. Now, though, Jupiter Media Metrix says offline retailers relying on online profits are wrongly judging the success of their Internet investments. The difference lies in the number of channels available. 

e-Commerce Obstacles
Consumer spending is one of the few bright spots on the world's economic horizons, but all is not well online. Explore some of the reasons why consumers are not reaching for their credit cards after perusing an e-commerce Web site.,,1381_863581,00.html 

e-Business for Accounting Firms
E-Business, Increasing Your Value to Your Clients Presented by: Gregory S. Price Director of Pannell Kerr Forster of Texas (PKF), P.C. 

Anatomy of an e-Business Failure
"No Longer Feeling @Home Why the Current Troubles of Excite@Home Aren't Quite as the Analysts Say, But They Were Probably Inevitable," by Robert X. Cringely, --- 

Excite was one of the first search engines and an early Internet portal, competing primarily with Yahoo. @Home was a high-speed Internet service provider owned by cable television systems. In January 1999, @Home bought Excite for $6.7 billion in stock. To understand how the companies got to today's dismal reality, it would be a good idea to start with a look at the two operations at the time of their merger. Excite was profitable, had no debt, and lots of cash from its successful IPO. Excite revenue came from advertising and nearly all its users were on analog modems. @Home was not profitable, but like Excite had no debt, and lots of cash from its successful IPO. Nearly all @Home users were on high-speed cable modems.

The merger was fraught with problems from the very beginning. The first big problem was the fact that @Home's board did not appear to understand the ramifications of their purchase of Excite until after it was done. The whole point of the merger was to create a broadband online service offering everything from connectivity to content -- a kind of high-speed AOL that would crush AOL. But after approving the merger, AT&T (@Home's largest shareholder) changed their mind on that vision. For awhile, it wasn't clear why the two companies had even merged.

Then the "open-access" pressure set in, with ISPs demanding access to users on @Home cable systems. Against this backdrop, uncertainty and infighting at the board level made it impossible for the company to execute against the synergies that made the merger worthwhile in the first place. With the board resisting the vision of the company, Excite and @Home were effectively just two unrelated businesses stuck on the same balance sheet.

The other big problem was @Home's mishandling of Excite. When the merger was completed, Excite was cash flow positive, bringing in a lot of revenue, and very successful in the portal space, though still far behind Yahoo. In fact, for the first year or so after the merger, Excite's revenue kept afloat the cable side of the business -- the @Home part.

With Excite paying the bills, the combined company still might have been successful -- except the newly merged company chose to deploy tremendous Excite resources on building a broadband-specific version of the portal when the revenue justification was tenuous (there just weren't enough broadband users) and the board support was non-existent. This resulted in a lack of focus and a long decline of the portal in general. Spending money to build the broadband portal hurt the narrowband portal that was paying the bills. The end result was that the company had a much harder time retaining portal advertisers than their competitors. All the portals were struggling with the downturn, but only Excite was neglecting its paying customers and burning resources to build a broadband presence that hardly anyone even saw. The result was that Excite declined faster and further than did the other portals.

Without advertisers, the portal business became a big cash drain on the overall company. Of course, the long-term vision for the merger required a broadband portal, but there simply weren't enough broadband customers to justify the resources expended on the project.

But wait, it gets worse. AT&T, @Home's largest shareholder, appears to many to have acted in a way that virtually guaranteed the failure of its subsidiary. Just when things were getting bleak, AT&T sent in a team of network engineers to improve reliability, and those engineers spent literally tens of millions of @Home dollars upgrading the network, contributing to the present cash crunch. Ultimately, @Home was in such poor financial shape that it had to sell back to AT&T the very same network it had just spent money upgrading. Big corporations can be smart sometimes. And if Excite@Home files for bankruptcy, as seems inevitable, its biggest creditor is AT&T, which will effectively get the rest of the company for free.

But what part of AT&T are we even talking about? Why AT&T Broadband, the part of AT&T that is, itself, up for sale! So having assisted in the death of its subsidiary, Ma Bell probably won't even get to share in any inheritance.

Wow, that's a lot of corporate intrigue! I only know about it because I have kept a close eye on the company since meeting the Excite founders in their garage back in 1993. And no, I have no financial interest in any of the companies mentioned in this column.

There is, however, this underlying issue that the analysts, especially, seem to have missed. Excite@Home failed mainly because broadband did not grow as quickly as expected. Broadband is not, at this time, a viable industry. Let me repeat that: Broadband is not, at this time, a viable industry. So Excite@Home was doomed to fail. There was probably nothing they could have done to stop the failure. Not only were there not enough broadband portal customers, but giving 65 percent of the ISP revenue to participating cable companies meant that the high-speed ISP part of the company would have never shown a profit no matter how big it grew.

CPA firms are looking for ways to add value and survive in the exploding world of electronic commerce and networking.  The American Institute of CPAs (AICPA) and the state CPA societies in the U.S. have partnered with CPA2Biz to launch helper portal envisioned in the AICPA Vision Process.  The CPA2Biz portal weill soon be operational at 


CPA2Biz represents a massive effort to brand the CPA profession as the premier e-enablement professional. As a CPA, you'll be able to give your clients the e-business capability they need and desire.  CPA2Biz means


1) What is CPA2Biz?
CPA2Biz, is a unique portal by CPAs for CPAs which offers a single point of access to the following:

2) Whom does CPA2Biz serve?
CPA2Biz serves you, the CPA, and your small business clients.

3) As a CPA, how will I benefit from your resources?
CPA2Biz is designed to move you up the value chain, which means that you will experience increased income, higher valued services, greater opportunities, and a stronger and more valuable relationship between you and your clients or employers.

There are lots of business portals out there. There are also lots of low-end software solutions. They promise many different things to many different people.

See also 


IT News From the Net ---

This Web site offers advice and news for corporate information technology officers. A recent article in the eBusiness News section was titled “Getting Venture Capital for Your Internet Start-Up.” The site provides links to other e-business sites (see the five listed below).

Consult the Consultants ---

The Boston Consulting Group offers articles written by IT professionals on its staff. Users can search archived titles in the BCG Publications section by choosing “e-commerce” from the “browse by” pull-down menu. Titles include “How the Internet Can Boost Your Brand,” “Arming for E-Combat in Asia Pacific: The New Rules of Engagement,” and “Organizing for E-Commerce.”

A Virtual Tutor ---

This site calls itself the “small business Internet tutorial for e-commerce entrepreneurs” and features virtual courses delivered to your e-mail. Course material includes advice and tips for getting a small business online. Also, Dr. Ebiz, an e-zine linked to this site, offers its own advice. A current issue states “paying for directory and search engine listings makes good sense.” Free e-mail subscriptions for Dr. Ebiz are available.

E-Commerce Law ---

Since the Internet emerged as one of the major players in the information game, the legal profession has been formulating and revising rules and regulations on online information. Lex Mercatoria, the “international trade and commercial law monitor,” includes documents on Web regulation in a section of the company’s site called Electronic Commerce. Among the topics found here are digital signatures and privacy.

Let’s Talk E-Commerce ---

This site is a “worldwide, CEO-driven effort to develop policies that promote global electronic commerce.” Progress reports from working groups of the Global Business Dialogue on Electronic Commerce appear here as well as related archived news articles on consumer confidence, cyber security, digital bridges, e-government, Internet payments and taxation.

E-Business Resources ---

Technical publisher Ziff Davis’ site boasts enough information and resources to make it a good first stop for any e-business research. It provides sections on best practices, news, opinions and reviews and links to e-commerce case studies and white papers. An e-commerce newsletter also is offered free to users via e-mail.


Electronic Commerce Institute 

The Electronic Commerce Institute (ECI) was founded in 1990 by the Board of Trade of Metropolitan Montreal in order to promote and accelerate the use of electronic commerce within companies. The Institute acts as a catalyst, a motivator and educator within the Montreal business community.

Electronic commerce has evolved to become a powerful reality in today's marketplace. The ECI's mission is to promote new practices and technologies that make it faster and simpler for companies to exchange information with their business partners.

Electronic commerce includes Electronic Document Interchange (EDI), but it has expanded to encompass bar coding, imaging, electronic forms, the Internet, extranets, intranets ... and the list goes on. All of these technologies help companies improve their business practices and sharpen their competitive edge.

To promote the use of these ever-emerging technologies, the ECI maintains an ongoing "Technology and Strategic Watch". The Institute's programs give members timely access to the strategic information it gathers. The Institute's purpose is to assist its members by providing them with an unbiased knowledge and expertise of its specialists.

Internet references
Suppliers Directory
EDI implementation guide list
Electronic commerce guide "E-commerce for small businesses"


The U.S. Government Knows How to Sell Online (e-Commerce)
From InformationWeek Online May 30, 2001

Uncle Sam Rings Up $3.6B In Online Sales

Look out, Jeff Bezos. Inc.'s $2.8 billion in annual revenue has been eclipsed by another E-commerce contender--a purveyor of flame throwers, burros, and Lamborghini Diablos that generated $3.6 billion in sales last year. The mastermind behind this E-retailing juggernaut? Uncle Sam.

That revelation comes from a recent study by the Pew Internet & American Life Project and Federal Computer Week magazine, which tracked the government's E-commerce activity. Of course, straight revenue comparisons may not be fair. After all, it's not exactly a level playing field for Amazon since the government's $3.6 billion came from 164 sites. That was a bit of a shock for Allan Holmes, editor-in-chief of Federal Computer Week. "When we first started, I had no idea how many sites we would find. I thought maybe a few dozen." Plus, that revenue figure would be significantly lower without the Treasury Department, which generated $3.3 billion from the sale of bonds and notes.

But the remaining $300 million in sales is still a significant achievement, considering the government hasn't done much to promote its efforts. Looking to bid on luxury items such as helicopters or sports cars? Try Bid4Assets, which sells property seized by the U.S. Marshals Service in criminal raids. "The federal government has always had surplus property and auctioned off property seized in drug busts. Now they're able to do it more efficiently and reach more people," Holmes says.


A Guide to E-Commerce at

An Electronic Encyclopedia  at
A longer listing of this and similar glossaries can be found at

U.S. Policy on E-Commerce at

Electronic Books Directory (U. Mn.)

Electronic Commerce World: On-line journal for electronic commerce - Articles, Resource Directory, Discussions

Internet Economy Indicators (e-Commerce) 

Oingo searching at 

From the Scout Report

The Economic and Social Impacts of Electronic Commerce: Preliminary Findings and Research Agenda_ [.pdf] 

Electronic Commerce has been in existence for little more than three years, but due to its enormous capacity to affect "economic activities and social environments," it has already had a huge impact on retail, finance, and communications, representing 30 percent of GDP. This 156-page report from the Organisation for Economic Co-operation and Development examines the past and potential impact that e-commerce promises to have on business and the economy. The report is broken into five chapters, which need to be downloaded separately, including "Growth of electronic commerce: present and potential," "Electronic commerce, jobs and skills," and "Societal implications of electronic commerce," each with its own set of charts and graphs. A report summary is also included

Mitchell Levy really has a street-smart handle on what is happening on the streets of e-commerce (EC), e-marketing, and new technologies. I signed up. The main link to the newsletter is at

eBusiness links brought to my attention by Levy Mitchell

E-Commerce Internet-based Services for Rent Storefronts:  

Electronic Software Distribution:

E-Marketing Automation:

Affiliate Marketing:

Newsletter Distribution:

Customer Interaction: live communication:

Customer Interaction: automated e-mail response

E-mail Marketing:

Online Auctions:

Create Your Own Search Engine:

Running a Bulletin Board:

Location Mapping:
   Online Calendar Applications:

Actively monitor the online community:

For more examples, please check out either of these two Web pages:

ISWORLD has a number of resources devoted to e-commerce. Included are cases, syllabi, site design, security, Internet technology, e-markets, applications, social issues and more.

Bob Jensen's threads on ROI and pro forma earnings --- 

Bob Jensen's evolving workshop on electronic business can be found at

Bob Jensen's Documents on Accounting Theory can be found at