Kingfisher, I don't know what is the right answer.
The continued delay with the website has me questioning the company's commitment to it, as well as their credibility with regard to delivering on schedule. The delay is not necessarily unforgivable but the fact that they are nearly 3 months late on a projection made only 4
months ago looks pretty bad. The latest word I have is that it probably is still at least a few weeks off from here.
Unfortunately, this issue makes one wonder whether the company is committed to being fully reporting in time also. They have until around March, I think, and have indicated that this is a company goal, but once you start to question one thing it is easy to question other things
too.
As to earnings, it would seem that their core business is
heading toward profitability given recent agreements and expansion of their partners (see most recent press release), but again until numbers are reported one can only rely on sketchy projections given verbally. So, in all, I'm disappointed as we all probably are. In the absense of proof to the contrary a prudent investor can only be optimistic for so long..
However, the price is down as a reflection of the increasing uncertainty and general lack of interest or conviction on the part of investors. If the company is committed to growing their business I think this is a great buy. IF.
I keep 2 things in mind:
First, they are a real business with real people working.
They have about 25 employees (just call and listen to their employee directory).
Second, they appear to have respected products within their niche, and their niche is likely to grow with the various relationships they have revealed in press releases.
This isn't a lot to rely on. But at 9 cents we are down to a market cap of around 2.3 million, which is low depending on two things: First, how likelihood is profitability? Second, how leading edge and marketable will their website be when/if it is released.
I was told that they expect to be profitable early in 2000. I was told that 1000 clients is critical mass upon
which profitability is more certain. I suspect their internet offerings being developed for institutional access will reduce costs to even further increase the likelihood of future profitability with margins even better than the current 25-45% which they indicated. Revenue per unit is low so cost per unit has to go down. Hopefully recurring use by clients results in increasing margins due to less need for training and support after year one.
If the website will be as customizable and interactive and connected to bigger players with alliances to draw traffic and generate advertizing and commission and product/supplement revenue as has been suggested, then we
could have a low cost ongoing source of revenue with very
high margins. I haven't looked around lately but as recent as 4 months ago I could find very little on the ]web that addressed the niche consumer market in impressive detail. If a company SHOULD be able to do it,
Surequest should. However, they have to be able to build
the traffic. That is where the large client base may be a real benefit; The more people that know about the site,
the better. Links to popular sites--dieting, athletes, etc. are critical. Now is the time to build awareness--as internet use is still growing and the niche
is fresh. That is why the website delay is so maddening!
With the high shares outstanding it takes significant profit to produce exciting earnings per share. How do you value a company operating at a loss? Future expected
returns per share. Too many variables are missing to confidently predict--thus the cheap price. Report a profit with a sexy, market leading website and you have a
stock on it's way to a dollar or more--depending on the alliances. Report a profit with no website and you have people like me projecting out whether you will make a penny, .02, or .04 cents during the year and how much in the next year, and whether the price should be at 20 cents, 40 cents or 80 cents. Too much is unknown but 10 cents seems cheap given the assumption of growth and imminent profitability.
Great results seem possible--maybe very possible--but sometimes things simply aren't what they seem. That's why at this point it remains a very high risk. If I owned no stock I'd buy some at these levels with little hesitation but that is only because I tolerate high risk.
It's a gamble but until they give us a bit more to grab onto it's very hard to know just how much of a gamble it is.
Good luck. Ted
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