NOW IS THE TIME TO BUY NOT SELL

The possibility of QXL going into administration has been raised again this morning, and justifiably. Companies that continue to lose money can't go on forever, that's obvious.

But I seriously question the amount of time QXL supposedly has to get things right. Administration as early as this summer seems unduly pessimistic. The company had 17 million cash in September with a cash burn of around 6 million per quarter and slowing. Hopefully that would have given a minimum nine months from September, hence the June 'speculation'. However I think it is pretty much accepted that costs will be down again when results are announced and turnover up (though this is becoming the achilles heel). On top of this the more cash burn is reduced the easier it will be to get at additional cash.

So let's assume cash burn goes to four million a quarter and they have 12 million pounds left. Straightaway the three quarters becomes the starting point for "administration" once again. And to remind you, that's before additional funding and increased revenues.

Personally I think QXL wont just be still around this summer, it'll be in business next summer. My own view is that if the next figures make it obvious the company is going to survive a good deal longer, it will finally be picked off. Ebay knows that every listing on QXL is a listing it could have had for itself. So minnow though it is, QXL still represents cash, and profit, that got away (besides, minnows do get taken out - I quote the mighty Halifax taking over Birmingham Midshires or Lloyds TSB annexing Cheltenham & Gloucester to name two from the banking world). It wont wait for ever to get QXL's customers for free even though many will have overlap. And I name Ebay only because it's the biggest.

I don't think QXL is about to fly like some people. 3.5p - 3.75p will do me just prior to or just after the February results. But the threat of imminent demise holds no fears for me whatsoever, I doubt it's about to happen and is simply a VERY WORST case scenario. I think there are much worse punts around to make 50% in a matter of weeks. Certainly the downside approaching results seems to be absolutely minimal. I'll be in for another 250,000 early next week.