Marchex, Inc. Message Board

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Non-Tech : Marchex, Inc.

MCHX 1.767

+1.6%

3:59 PM EST

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From: playavermont	7/11/2006 11:44:48 AM
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Bottom?? Analysis is based upon the fact that they currently generate approximately $45 to $50 Million in annual revenues thru the direct navigation channel. $50 Million per year run rate on direct navigation. $80 Million per year on search marketing. (Trafficleader, Enhance, Industrybrains, etc.) $50 Million Direct Navigation at 60% operating margins = $30 Million in Direct Navigation operating profits. $80 Million Search Marketing at 5% operating margins = $4 Million in search marketing operating profits. Direct Navigation can grow top line at 20% per year based upon increased ppc prices, increased sites utility, increased visibility in algorithmic results, direct advertising sponsorships. Search Marketing can grow top line at only 5% per year and is largely becoming marginalized. Longer term break even business segment. But it can supplement and support direct navigation network efforts. Current 2007 revenue estimate $144 Million. Current 2008 revenue estimate $161 Million. 24 P/E on 2006 operating earnings of $34 Million = $612 Million 20 P/E on 2007 operating earnings of $40 Million = $800 Million 18 P/E on 2008 operating earnings of $47 Million = $846 Million Fair Value $15.40 per share to $19.80 per share? If Marchex relied solely upon the direct navigation segment they could generate an estimated 2008 revenue of $70 Million with operating earnings of at least $35 Million and possibly as much as $50 Million. At a very rich 40 P/E on that estimate it could be worth as much as $1.8 Billion. At a LOW P/E of 15 it would be worth $675 Million. This is a virtual cash generation machine. Rely on your own analysis - this stock has been very volatile.

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