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Non-Tech : Marchex, Inc.
MCHX 1.640-0.6%Jan 30 9:30 AM EST
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From: playavermont12/6/2004 8:50:39 PM
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2 weeks since the "asset acquisition" and financing announcement. The details of the financing coming within 2 weeks.

1. New 2005 guidance of $84 Million Revenue / 28%+ operating margins is probably conservative. That puts operating earnings at $23.5 Million minimum. They will go from $6 Million +/- operating earnings in 2004 to $23.5 Million in 2005. What kind of P/E can we apply? 40, 50, 60? Lets go conservative and say 40 P/E. THAT IS A $940 MILLION MKT. CAP.

2. Assume they raise ONLY $155 Million (more than likely they will raise more). Assume it is all new stock issuance. Roughly 9 million new shares. Add to the existing 27 Million +/- shares outstanding to have a total of 36 Million shares outstanding.

$940 Million MKT CAP / 36 Million shares = $26 per share. Based on a conservative P/E of 40. (Apply an EBAY or YHOO P/E and you get a $50 to $60 price)

If the market looks ahead then $26 +/- should be the price target for February / March time frame.

If they raise more than the $155 Million then this price target more than likely would be raised to $30 to $35 per share due to their ability to finance other deals over the coming quarters (regardless of the additional dilution associated with the added funding).

The story here is the ability for them to build out this business over the next few years. 30%+ long term operating margins on an ever expanding and developing group of specific commerce verticals has great potential.

Year end target $20 to $24.
April 2005 target $26 to $32.
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