Glen:
LDCL is a black horse with high degree of risk. However, i think here are some
things people are concerned when evaluating LDCL:
1:) They have only 4.9M in revenue and 190M loss.
The most talked about 4.9M number is the first 6 months operation revenue from LDCL.
It is very typical for any company to have small to zero revenue in first serveral
months after the establishment.
In fact, the revenue number in Q4 is 8.9M, almost doubled what they had for the
first 2-3 quarters combined.
Moreover, the 120M booking they have for the next 18 months comes mostly from
bluechip companies like NKE, Ford, BlockBuster, etc, who have very low risk
of backing off from the contract and has ZERO risk of running out of money:)
Let's say LDCL can only get 100M in the next 18 months. That put them around 66M
revenue for this fiscal year. Plus, they have got to sign up new customers in the
next 9 months, so, I think 60-70M should be a good lower bound for them in this
fiscal year.
Now, 70M is not a not, but neither is $280M market cap when LDCL was at 4.
When you add up all these together, LDCL is actually pretty fairly to under
valued at 4.
2:) Now, let's look at loss. First that 190M loss is not all operational loss. Most
of that belongs to stock option program. Second, LDCL is not in the selling
a dollar for 85 cents business. Their business model requires substaintial
initial investment, but the profit margin will improve as long as their customers
stay with as the recurring cost is very insignificant compared to the initial
cost.
I think at least so far LDCL is moving to the right direction. Sure they still
have some shitty dot-coms in their customer list. But the new customers they
signed up are almost exclusively big deep-pocket names. This will help LDCL
to improve their profit margin in the long term.
3:) Everyone seems to forget the market itself was simply going through the last
stage of the biggest bear market in NASDAQ. People were panic and stocks were
dumping cheap. We may or may not see the bottom already, but I say we
were close to the bottom when NASDAQ was 1600 2 weeks ago.
All in all, I think LDCL is certainly a riskly investment but with a good shot. If
they can weather this market storm and keep expanding their customer base, two to
three years later, I am not suprised at all to see LDCL to touch 15-20 range. Not bad
at all if you get in at 4. |
