Company puts domain name on the books at a huge sum.
How much is the cloud.com domain name worth?
According to Citrix’s accountants, it’s $18 million.
The company acquired Cloud.com (the business) for $200 million plus earlier this year.
George Kirikos just noticed that the company is amortizing the domain itself with a value of $18 million.
Now this is just an accounting number, so I’m not sure the domain was worth that much when it wasn’t attached to a business. But it’s still an interesting valuation for a great domain in a growing business.
Jon says
The real value of the category-killer generic .com is how much big end user would sell it for. $18M for Cloud.com as some base value is about right. Any top category generic .com in large ecommerce vertical is going to be over $20M by this valuation.
Josh says
Could it be and keep in mind I am a bit naive, this number works for tax purposes down the road?
The best part is how they don`t have to prove its market value but will use that make believe obvious ridiculous number to take advantage of tax savings year after year.
It is now clear they are tax cheats.
Bryan G says
How are they able to amortize this?
Tier 1 Development says
@ Jon
I can say with 100% confidence that Citrix would not have paid $5M let alone $18M for that domain.
End users don’t cut checks that large for domains, period.
Jon says
to Tier 1
The question is how much would Citrix SELL cloud.com for. Offer them $20M and see for yourself how quickly you will get a no.
And how can you have 100% confidence about what large end users pay for domains like cloud.com when 100% of sales go unreported.
Josh says
While it could be written down as a endless or timeless asset it is still open to periodic review. Should they feel it is no longer worth $18M and instead $15M, there’s a $3M loss to report. I don’t believe they would do this for any reason but reducing taxation. My next purchase may be valued at $100M, wonder who I have to own to get that to pass.
Andrew Allemann says
It’s just amortization of intangible property.
Tier 1 Development says
@ Jon
100% of sales go unreported. Really? I can’t get into exactly how I know what Citrix would or would not pay for that domain. I will say that I live in south Florida and.. I’ll leave it there.
Too many people are focused on what’s getting reported on public companies quarterly filings.
If you’ve got a premiere domain or even one that you think could be, focus on building it. Focus less on talking it up or having someone broker it.
Don’t buy domains based on what’s sold recently.
Look at all the people dumping domains in the insurance vertical that bought them up when Quinn Street bought CarInsurance.com for $49M.
Don’t believe the hype, make prudent investments based on fundamentals not headlines or trends.
Web hosting says
Isn’t 18m too much ?
Jonathan says
Please forward the insurance /financial TLD’s my way I have noted noted any one/two word com domain dumping? Quinnstreet stock went down & Bankrate went up !!! Who as heard of Citrix in whatever business capacity, who will immediately know what Cloud.com offers- sells – services. That is what they bought or defended against. Toys.com = Toys-R-Us. Cloud.com was a prudent marketing investment.
Tier 1 Development says
@ Jonathan
Citrix is a very well known company with anyone who is an executive at a fortune 500 company. GoTo Meeting is one of their products. Cloud.com was a company with a product and I believe 80 employees and rev (said to be under $20M) when they bought it. You can say whatever you want but there’s zero chance they would have paid $18M for cloud.com.
Companies (especially public ones) don’t eight figures on just a domain. It’s too hard to justify to a board. Great example of how tight they are with their money. RealEstate.com, arguably the best domain for that industry and it was a developed site which had a massive footprint online and significant revenue. And it’s sold for $8.25M.
You think they didn’t shop that thing around to every large potential buyer?
The reason I’m against celebrating these headlines is because it just gives people false hope. That their domain is worth a lot more than it actually is.
That $18M figure Citrix assigned the domain, it’s for taxes purposes. That’s it.
Don’t believe the hype and keep your head out of the cloud.
Jeff Edelman says
I agree that 18 million dollars is way too high and that they would never be able to get that price if they tried to sell it. That said, companies that take advantage of a prime generic understand that the domain name is incredibly valuable to what they are doing. I know a couple of the people from The Weather Channel. Now that they own Weather.com, you could offer them 25 million for that domain name and they’d never sell it for that price. The domain name is tremendously valuable to them even though their company is still primarily known as The Weather Channel.
If Citrix is trying to become a player in the Cloud computing market, think of how much additional advertising they would have to do to make the public aware of their Cloud offering and educate the public on it if they were promoting some other brand or inferior domain name. By owning Cloud.com, their advertising buys become infinitely more efficient. Considering it costs about $500,000 just to create a standard, 30 second television ad, it’s clear that the value of this domain is in the millions.
Zap says
How does the appraisal for the domains work,is there an exact formula for validating a domain name? 18 millions sound a bit over the top- isn’t it?Domain appraisal depends on the position you are – if are a seller or a buyer!
Alex Tajirian says
@ Andrew
Accounting amortization comes from wear and tear of the asset. How is this related to domain names? Do you mean intangible asset?
Andrew Allemann says
Yes, Alex
Jonathan says
t1d.com/@ I agree re 18 million valuation is to high and should have mention that in my comment I do think it is a high value domain of over 5m – 8m Thanks to Apple.
executive at a fortune 500 company knowing who Citrix are has nothing to do with it.
Duras says
CloudPrivate.com is for sale.
Josh says
A domain is not open to wear and tear, it is actually considered timeless/endless if desired. However as I said above at any point they can use it as a loss if they somehow justify it or not I am not sure.
What Andrew may refer to is payment/expense associated.
Alex Tajirian says
@ Josh
A lose appears on accounting statements only if the company sells the asset at a loss. If an asset is not sold, any drop in its market value does not appear on accounting statements.
Andrew Allemann says
@ Alex – hmm, I recall eBay writing down its Skype asset quite a bit.
Josh says
I have to disagree but with hesitation as you very well could be right but my understanding is if the company claims the asset (even intellectual) has lost value it can be a loss and impact accounting/taxation.
I only can imagine a very high value is initially given so such accounting can be done down the road, if so and I am correct that is more than evasion, it’s pre mmeditated evasion.
Don says
18 million to much??
To own the best tech name for the next 10 years.
I can’t recall but how much is apple paying for the iphone name. And paying. I think citrix knows what they are doing 🙂
Duras says
TheOfficialCloud.com
MyDearCloud.com
are for sale.
Abraham says
cloudCpt.com (cloudcomputing) is for sale
domo sapiens says
what you missed:
Mike: Has has owning the domain Cloud.com impacted your business?
Peder: It has had a significant impact on the growth of the business as we came out of stealth mode. For one, having a top level domain brings instant traffic, awareness and, in many cases, credibility in a market place. We quickly went from unknown to a top of mind provider in the cloud computing space. Additionally, as we launched the company, the excitement around the space coupled with the strength of the domain led to a significant amount of coverage in the press, which we never could have expected as a small company just launching a product.
http://sullysblog.com/Cloud-Peder-Ulander