Stephan :
Some of this may be a rehash of my previous posts, but here is a
summary of my thoughts on HART ;
1) Strengths : 200,000 customers paying $30/mo. That's 72M/yr in
revenue. Now, if they can continue to add 10%/yr in existing
markets and gradually develop the new markets, they will continue
to have good revenue growth for the forseeable future. A recent
report showed that for the first time the Nielsens for the combined
offerings of cable TV programs exceeded that of the VHF channels.
That kind of news is good for HART.
2) Weaknesses : the 33 channels they offer is far short of what's
available from DBS (USSB/Direct TV, Echostar, etc.). The whole
wireless cable industry seemed to be in "deep yogurt" recently.
Some of them where (I think) temporarily delisted from NASDAQ.
Secondly, it takes
quite a while to recoup the expenses required of HART for each
customer. For example, (ignoring the cost of the tower), it costs
HART about $450 (equipment, labor, overhead) to connect a customer
to their service. Thirdly, they haven't turned the corner yet in
decreasing the rate of loss each quarter.
3) Opportunities : develop the digital capabilities. This is
the big question mark. Other wireless cable TV companies (CAI
Wireless, People's Choice, e.g.) have already embarked on such
ventures as high-speed Internet access. There hasn't been any
recent news from HART on what their strategy is in this area. These
companies are de-emphasizing the cable TV aspect of their business.
4) Threats : Satellite TV. There's no doubt that the rate of
growth of satellite TV exceeds that of wireless cable (and of cable
in general). One disadvantage of DBS has been
that they do not offer the over-the-air stations (e.g., ABC) to
be carried. Therefore, a customer must keep their antenna to
receive VHF/UHF channels. Another disadvantage, that appears to
be going away, is the cost to the customer. Primestar, e.g., does
not require customers to buy the satellite equipment. One might
conclude that DBS stocks is the way to go. However, if you look
at USSB and DISH, you will see that recent stock performance has
been poor.
The other thing to consider is that when a stock, like HART, is
trading in the sub-$2 range, it doesn't take much movement to get
a 15-20% return. Recently it seems to be a daily occurrence
to see HART having 10+% swings in its closing price. Of course,
trying to time buys is tricky, and is more gambling than it is
investing. I'm in for the long haul. |
