By Rick Aristotle Munarriz (TMF Edible)

Look up iVillage Idiot in a dictionary and you'll probably find the picture of the poor investor who paid $130 a share for iVillage back in April 1999. A month earlier, the Internet's premier site devoted to women had gone public in a hot initial public offering.

Let's move ahead 13 months. Same company. A lot more traffic. Way more in revenues. The iVillage Idiot cashed out at $7 1/4 last week. A year ago the company was serving up irrational exuberance. No question. But today the stock is dishing out exuberant irrationality. What a lesson. What a bargain.

But how can I, a Rick and not a Rickie, come to comprehend the world of iVillage.com? Surely my estrogen-free praise would ring hollow. So I did what any male analyst would do in scoping out the The Women's Network -- I pulled a Buffy & Hildegarde. In drag, I roamed around, capping off my trek with a game of Baby Name Scrambler.

The cute online game, which blends elements of Jumble with Scrabble using the Parent Soup site's 10,000 baby name dictionary, had me hooked. If there was ever an argument as to which is the brighter sex, let's just say I got trounced. Sorry to let you down, guys. I came in dead last in a field of two dozen. Mommyof3 quadrupled my score every time out. Who would have thought that Tulip and Freep are not bona fide names? I mean, really.

But I noticed something. Well, beyond the fact that next time I go undercover I don't need the wig, mascara, and stiletto heels for an online assignment. Anyway, what I found was that in the game's chat area, not once did anyone ever blurt out the "Sex/Age?" pick-up chat staples you find all over sites like America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> and Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %>.

Few things offend me more than the tongue-wagging that takes place when a remotely female-sounding screen name enters a chatroom. And if I'm embarrassed, I can only imagine how most -- though I'll concede not all -- women feel under those circumstances. iVillage provides a welcome sanctuary where a chat event doesn't begin to resemble some online construction worker site.

I took in some of iVillage's 18 content channels. From a well-presented Money Life financial area to the popular Astrology site (yes, they do own Astrology.com), the company's offerings run wide. I'll probably never fully appreciate all that iVillage has to offer, but isn't that the point? Like Secret deodorant, it's a site that is strong enough for a man, but made for a woman.

With women making up just over half of the world's population, it's not too shabby a target market. While just 48% of the online population is presently female, Ad Age studies show that women control or influence 80% of all offline buying decisions.

You can do a lot worse than being the top dog in an online segment that is catering to the offline world's largest untapped market. That isn't to say that iVillage isn't producing impressive results right now. There are now five million registered users (through iVillage, Astrology.com, and the company's e-tail ventures like iBaby). When the company went public last year, only 1.5 million had signed up. The company is generating more than 150 million page views a month.

Is the company losing money? Sure. But losses have narrowed over the past three quarters. Operating expenses, which last year ate up 267% of revenues, has dropped to 185% this past quarter. I'm not cheering those results in absolute terms, but the momentum is clearly there for a company that is learning how to manage its explosive topline growth. Yes, sales are on a tear right now. Last year, revenues grew by 197%. For this past March quarter they soared 221%. How many established Internet companies with triple-digit topline growth are actually growing their growth rate? Paul might know some. I can't think of any.

Thanks to the IPO and a secondary offering later in the year, the company has $93.2 million in cash. The way EBITDA (earnings before interest, taxes, depreciation, and amortization) keeps improving, iVillage's healthy balance sheet is well-positioned to see it through at least the next two years. What will the Internet look like then?

1. More users. A larger percentage of the new users will be women.
   
2. More advertising. Forrester Research projects $22.2 billion will be spent in online marketing by 2004.
   
3. Less companies to split up the ad money. The shakeout will weed out lesser and undercapitalized ventures.

What does this all mean? iVillage is already attracting one of every five female users on any given month. As other sites close shop -- or sell themselves to iVillage on the cheap -- expect that ratio to keep working in the company's favor. Add to that the sheer hundreds of millions of women that will join the online world over the next few years. OK, now turn to the advertisers who want in on this lucrative target group. The company already has lined up household name sponsors like Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>, Ford <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>, Schwab <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCH)") else Response.Write("(NYSE: SCH)") end if %>, and Nordstrom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JWN)") else Response.Write("(NYSE: JWN)") end if %>. iVillage is going to be dishing out a lot more page views in the future.

Folks are going to keep coming and iVillage is going to keep getting thicker and thicker slices of that advertising budget pie. Wall Street might be a bit tenuous on the prospects of e-commerce, but there is no denying the advertising merits of the Internet. As a matter of fact, iVillage's ad sales now make up 85% of total revenues -- whereas e-tail made up 27% of total sales just a year ago. In the process, gross margins have almost tripled over the past year.

I don't want to sell short the prospects of the company's iBaby, iMaternity, and PlusBoutique storefronts. But iVillage is smart. It knows that until the e-tail shakeout is complete, it's just a money-losing realm of cutthroat discounters vying for the online merchandising dollar. Once the playing field empties out, e-tailing will be a major -- and dare I say profitable -- component of the iVillage strategy.

In closing, this isn't Rickie and Paula here. Can I, or any male Fool for that matter, invest in iVilliage with confidence? I keep thinking back to legendary investor Peter Lynch. As a major proponent of buying what you know, he still claims that his greatest purchases came from following his wife and daughters around the mall. Sexist? Maybe. A great way to follow where the money goes? Definitely.

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