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In 1998, Ulrich Hülle faced a tough career dilemma: Should he stick with a secure job as CFO of a German furniture company, or chuck it all to work for an 80-year-old porn queen? Talk about a no-brainer. "I spoke to friends and colleagues, and they all said it wouldn't hurt my career, it would help it," says Hülle, now CFO of Beate Uhse, Germany's biggest purveyor of sex aids and erotic material.
But then, Beate Uhse -- whose married name is Beate Rotermund-Uhse -- is no ordinary 80-year-old porn queen. The hard-charging grandmother, who shuttled Luftwaffe fighter planes to the front during World War II, has made pornography mainstream in Germany. With nearly universal name recognition, she's probably the best-known female entrepreneur in Germany. Her sex shops occupy prime real estate in city retail centers and places like the Frankfurt airport. Shares in the company have more than doubled, to $17.25, since a May, 1999, IPO as investors cashed in on a rare chance to invest in the $1.4 billion market for online sex. In December came the ultimate badge of financial market acceptance: Beate Uhse shares joined Germany's MDAX index, just a notch lower in status than the blue-chip DAX index.
Indeed, the success of Beate Uhse shares has touched off a boomlet in German sex stocks. Cologne-based Condomi, Europe's biggest maker of condoms, sold shares to the public in November, as did Brainpool TV, which produces erotic TV programs. "Beate Uhse opened the door," acknowledges Condomi founder Peter Klandt, co-chairman of the company's supervisory board.
"THE LAND'S END OF EROTIC."
Germany may have high taxes and inflexible labor rules, but sex is one area where the country's business environment excels over the rest of the industrialized world. Germans are simply more relaxed about sexuality than other folks. This is, after all, a country where grandmothers sunbathe topless at public swimming pools, and soft-core porn is a staple of German TV.
Not that it was always this way. Rotermund-Uhse remembers when she was denied entry into the tennis club in Flensburg, where her company is located. But she battled porn's bad image by treating sex like any other business. Customers with problems or questions can dial a call center for advice. Rotermund-Uhse never shied from posing -- clothed, of course -- with the sex aids the company sells by catalog. The site of a gray-haired lady displaying a large rubber "stimulation device" helped customers get over their embarrassment about buying such products. And every purchase has a money-back guarantee. "We're the Land's End of erotic," Rotermund-Uhse boasts.
HARD NUMBERS.
Beate Uhse now has a stock market value of some $724 million, not bad for a company that expects sales this year of around $200 million. Multimedia, chiefly the company's Internet sites, accounts for about a third of Beate Uhse's revenues, but it's the fastest growing segment. And it's the Internet angle that really has investors excited.
Although hard numbers are difficult to come by, many market researchers believe that pornography continues to dominate the market for online content. Datamonitor estimates the market for online porn in the U.S. and Western Europe will be worth $3.2 billion in 2003, or 58% of the total amount spent by consumers for content online. Beate Uhse is one of the only venues for investors to profit from that action. Moreover, the company boasts that holy grail of the online world, a brand name: 98% of Germans know Beate Uhse. In contrast to the anonymous and sometimes dubious operators of online sex shops, Beate Uhse has been in business since 1947.
Investors are betting that online porn seekers will be more willing to share their credit-card numbers with Beate Uhse than other sex sites. "We've always stood openly by our products," Rotermund-Uhse says. "The others just wanted to make a quick buck and buy a beach house." Next stop: The global sex market. Beate Uhse has been making acquisitions around Europe, such as Dutch-Belgian sex-shop chain Sandereijn and Australian Internet porn purveyor Sharon Austen. Beate Uhse even plans to enter the U.S. market. But the company is aware it's entering Jerry Falwell territory. The strategy, says CFO Hülle: Move very carefully.
By Jack Ewing in Frankfurt
EDITED BY PAUL JUDGE
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