Club Fatt Threaders, i'm new to the research team and Fatt Matt asked that I post my DD on ELNK:
I'm long ELNK as of late Thursday July 1. Position at 63, stock currently at 66.
Market Cap 2.13B, Float only 16.2M
52 wk range 19.50-99.37
Upgraded from buy to strong buy 6-22-98 by Crutt-Roth
Strong rumors covered on CNBC etc... concerning GTW buyout at $75/share minimum. The Street confirmed merger talks today. Sprint(FON) owns a large percentage of ELNK and it's been reported does not want to let go easily, ie bidding war.
Earthlink is an ISP that is extremely undervalued compared to competition based on #of subscribers. ELNK has a core group of 1.1 million subscribers and will report an increase of 170,000-180,000 in the second qtr. The co. is almost 5yrs old, which is light years for Inet companies.
This is an earnings play, they report July 14th, I will sell my position on or before July 14th period.
The earnings consensus is -.20 and the whisper is -.13, this disparity in my opinion will fuel earnings momentum buying pressure going forward this week into next. The kicker IMO is the company will actually make money in the year 2000, whodathunkit?
I realize the stock is up 3 from my entry, but I believe there's more gas left in ELNK as it's just getting started. The -.20 is still a huge decreased loss comparatively vs. last yrs qtr.
AOL has received a lot of nice press recently and this has brought more attention to the ISP segment of the Inets and ELNK will benefit from this attention. MSPG is also another undervalued ISP. Additionally, Inet IPO's are surging and more importantly YHOO reports this week which could start an Inet rally.
If anyone has any questions or comments please feel free let me know. Dave(Gladman)
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