Sometimes its the obvious that is missed. There's been a new birth and like most births, the ordeal has been stressful and painful. And right now, like most babies, this one is very ugly. However, what we now have, pending the inevitable sale of ADS, is a standalone, pure play on visual technology and services for the digital age. No more manufacturing and its low margin and slow growth. Its the defacto IPO of iNextv. I wouldn't be surprised if there was a name change announced very soon..just a WAG. I also expect that now there is the pure play trading, it makes it easier for strategic investment directly into iNextv. Say like Yahoo's recent 10 million into iFILM. I also think that at some point, certainly not now at 40 cents a share, but, at some point, a pure play in a high growth business is likely to attract Wall Street coverage.
Gotta make it work, no question. But right now, iNextv starts with 12 million in net income or 20 cents a share from royalties. iNextv costs them 8-12 million a year to operate going forward. I assume the 8 million in debt is paid off with the realestate sale and I assume ADS is sold for 40 million without the patents and the remaining debt is paid off at maturity in 3/15/2003. So cash to fund iNextv will be available. So if revenues from iNextv grow along with industry forecasts for internet video and broadband, then at 20 million, profits could be 8 million or at 40 million revs, profits could be 16 million or higher. What would be the price earnings paid for stock of a company growing revenues and earnings 100% a year,or 50% or 30%. The fact is, if and it is a big IF, if iNextv works, if broadband actually happens (if you think it won't, better sell your Cisco and Microsoft, cause they bet their companies on this as well), then the value of iNExtv as a pure growth company will increase rapidly.
Back to the present facts: we start with 20 cents in earnings from video royalties;at 0 revenues from iNextv, its a wash. Every dollar of revenue generated by iNextv is profit before interest and taxes. |
