David and all, I'm trying to get a discussion going about @homes earnings potential - no hype, strictly analytics.
From their prospectus (available at Edgar online) I figure they receive about $200/yr per subscriber based on the following:
1. They had 40M in cash - over 6 months @ 5% this should generate about $1M in revenues.
2. They had $1.8M in revenues over 6 months with 7000 subscribers, subtract $1M in interest income and you get $800,000 or about $100/subscriber over 6months; or $200/yr.
3. Lets say they are able to subscribe 5 million customers over a 3 year period (a big if) - thats $1 Billion in revenues. My guess is that expenses (which have tripled over the last year to about a $50M/yr run rate) will increase to about 0.3 billion/yr over the next few years (this is where I need help). That would leave about 0.7billion in pre-tax profits or 0.5 billion in post tax profits or about $5/share, which could support substantial appreciation over the next few years.
4. Any comments - I may be all wet but this is a strawman for everone
to comment on.
Other comments:
5. They structured the ipo to keep most of the wealth to themselves, public pays $10 - $20; insiders well under $1. Last year Hearst bought 500,000 shares for $25k promissory note - thats 5 cents a share! Barksdale owns 0.5 million shares - not sure how low a price he paid.
6. TCI, Comcast, Cox and others hold major stake. This sounds like a possible win-win situation for many. Cable companies and @home can make out very well, consumers will get much higher speeds, and price/speed will actually go down, and phone companies will stop losing $ on lines being tied up by internet.
Gary |
