M&A West, Inc. beats out CMGI and ICGE in the race to profitability
link: otcnn.com
By Ian Gorman
Published by OTCNN.com
08/25/2000 11:30 AM EST
Last week, after San Francisco area-based Internet incubator, M&A West, Inc. (OTCBB: MAWI) announced record financial results
and in reaction the company’s stock took a major turn northward. The company reported that its revenues grew by more than 1,100
percent, but what is exceptional in this market is that M&A West is actually making money.
The company’s net income combined with unrealized gains totaled $1.44 per share. At the time of the announcement, the company’s stock
was trading below $4, at less than a three times multiple of its income and unrealized gains. The announcement sent M&A West’s stock
up as high as $8.0625. The stock price has since then backed down some, settling at $7 at the close of trading yesterday.
With 11 million shares outstanding, the current stock price puts MAWI’s market cap at just $77 million. According to the company’s press
releases, its business model is similar to that of CMGI, (NASDAQ: CMGI). In comparison, CMGI, which many see as the granddaddy of
Internet incubators has a market cap of $13 billion, even though it continues to lose money at a pace of $1.53 per share (trailing twelve
months).
Another large company operating in the same realm is Internet Capital Group (NASDAQ: ICGE), which owns interests in 49
companies. But it has the same problem as CMGI and many other incubators – profitability, or more specifically the lack thereof. Out of
its $14.2 million in sales, the company lost -$149.7 million last year (EBITDA). Yet, ICGE’s market cap is over $9.5 billion.
With so many companies owning equity in other companies these days, it is becoming more and more common to see the term “unrealized
gains” in financial filings. In M&A West’s cases, its unusually high net income came primarily from unrealized gains in its portfolio of
available-for-sale securities. So, should “gains” of this type be weighted as heavily as other forms of income?
According to the company, the answer is yes, because M&A West’s business model is based on realizing capital gains through the
acquisition and development of companies, which M&A West then takes public and continues to provide business services for. In other
words, the company is in the business of monetizing transactions, not baby-sitting or running its portfolio companies.
“Unlike other Internet incubators, who may fund Internet companies in the hope that they will make money and go public in the distant
future, our primary focus is on monetizing transactions in the short run. We don't make investments in companies unless we feel certain
that we can get a very high return on our investment within 6-18 months. Our acquisition strategy is designed accordingly to enable us to
make investments in severely undervalued companies with a clearly executable plan for our profitable exit,” said the company’s CEO
Scott Kelly.
M&A West’s strategy of identifying and investing in Internet companies that are poised to go public in the shorter-term is allowing the
company to multiply its capital base, which in turn allows it to pursue more ventures.
Stock Action Summary
Price as of 8/24/00: $7.00 up $0.75
Volume: 30,900
Bid: $6.6875 Ask: $6.875
P/E: 41.2
52-week range: $3.375 - $27.75
Shares Outstanding: 11,000,000
Market Cap: $77.0 million.
OTC News Network is an unbiased, objective news source focusing exclusively on OTC Bulletin Board companies. We do NOT publish any paid editorial content. In addition, OTC News Network does NOT own any stock in any OTC Bulletin Board companies. M&A West, Inc., was featured last week in the sponsored section of our daily Today's Top Headlines subscriber based e-mail broadcast, and OTCNN received compensation of two thousand dollars to do so from the company's IR firm for that sponsorship. None of the shareholders, officers and affiliated entities own any MAWI stock. Two of OTCNN’s shareholders work for an investor relations firm retained by MAWI. They and the company they represent don't currently own any MAWI shares, but the company is contracted to receive two thousand MAWI shares per month as a compensation for its services according to a
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ADDITIONAL CONTACT INFO AND DISCLAIMER:
For more information you can contact InvestorServicesOnline (Internet-Specific Investor Relations) at E-mail:
investorservicesonline@yahoo.com or Company Representative, Rick West, TEL: 650/827-7308 (Public Relations) E-mail:Rick@mawest.com
Rick West and Merger Communications are not associated with InvestorServicesOnline.
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