Negative. Complete reversal and change of heart. But, at these levels and given the transition the company has taken in focusing solely on its core marketing business, I'll looking for it to begin to come in line with valuations of companies in this sector - that's all. No more pipe dream stuff. Currently, MSGi trades at less than 0.25x FY2001 revenues. The sector average is well above 2x revenues even after the Dow and Nasdaq correction. MSGi will enjoy $230 - $240 million in revenues in FY2001. Do the math.
Now that MSGi is no longer an Internet incubator, has no more Internet cash drains, has taken all of its charges/beating, its a pure value play, imho. I'm looking for MSGi to be earnings positive in its largest Qtr. of the year, 2nd, which began Oct. 1, 2000, and which should report in late Feb. 2001.
Even getting back to a valuation of a mere 1x revenues is a 4-bagger from here or an $8 stock. If earnings become apparent after 2nd Qtr., then I expect MSGi to begin its upward trek. Just my opinion, however. In any event, I've accumulated quite a number of shares all below $2. We'll see what happens in the course of the next 9 months.
I also believe that MSGi is a potential buy-out target given its highly recurring revenues, list of blue-chip clients, and a diverse client base of some 5000 clients - none of which represent more than 5% of its revenues. Personally, I think the company could sell and wouldn't sell for less than $1.5x revenues or $12 - $15 bucks per share. |
