Casino?
Well, I suppose that a tortured view is that any stock is a roll of the dice. The idea that MSGi might go under is incredibly far-fetched at this point. The company has highly recurring revenues of $250 million, now with EBITDA of $17 - $22 million on an annualized basis. It will post EPS for FY2001 in the .30 - .34 range, perhaps more. Bottom line is that OMC, HHS, DLCK, WPP all are potential suitors of MSGI and with these numbers, MSGI will go for no less than $10 - $12 per share. Without a buyout, MSGi will begin to come back in line with its peers' valuations, (i.e., 2x - 3.4x revenues), imho.
I agree that JB's credibility is definitely at issue, but all in all his performance, putting aside the dismal stock price depreciation, hasn't been bad. This is no solice for those who bought above $10, but for those looking at MSGI now, it's a no-brainer, imho.
When JB got the company it was at about break even with annual revenues of $16 million. He secured financing from GE and then did the CMGi deal re: CMG Direct. The stock ran to the moon on hype to $60 but at least JB used the stock to buy Grizzard, which garnered a very profitable company with about $16 million EBITDA and $65+ million in revenues for a price tag of only $100 million. But, it was purchased for even cheaper given that $53 million of that $100 million was paid for with MSGI stock priced at, now, $12+.
Now MSGI has highly recurring revenues, positive cash flow, no need for further financing, something approaching $250 million annualized revenues and, once the dust settles, $17 - $22 million EBITDA and a profitable company.
To boot, MSGi just recently announced another acquisition of Perks to add another $10 million in revenues. This is not the markings of a company about to go belly up. MSGI has all the tale-tale signs of a value play - a company that temporarily lost its focus as an Internet incubator, suffered the consequences, and is now getting right back on track and has now turned to corner to profitabilty, as was clearly expressed in last Qtr.'s press release. The company will post earnings of .30+ cents for this December Qtr., that you can count on. The next two qtr's will probably be flat, but we'll see EPS at least in the .40 cent range for FY2001, imho. All we need to prevent the GE dilution is to satisfy the GE earnings test of .30 cents per share. This MSGI will easily accomplish, imho.
But, shadows still abound and lack of confidence in management clearly pervades - especially in this market, or lack thereof. |
