Roger, hope you pocket a bundle with ETEC tomorrow (I don't follow it).
Another one you might want to take a look at is NTKI. Here's the story
1. Business:
-Online music store. That's it, plain and simple.
2. Operating Results
1996 1997
Revenues($M) 1.7 11.7
Losses ($M) 18.9 28.7
LPS ($) 6.85 5.88
Cutthroat business, gross margin <10%.
3. Competition
-Over 200 sites currently selling music online
-Major competitors:CD Now, AMZN is ramping up to enter in 6 months.
4. Underwriters'spin
- Projected NTKI to do $200 M in 99 and turn a profit in Q3/99.
- See #5 for third party projections.
5. Projections for total online music business
- Jupiter Communications'projected total online music sales:
Year Sales ($M)
1998 81
1999 174
2000 354
2001 670
- Jupiter's #s is $174 M for all online music sales. If NTKI is lucky,
it may get 25% of that, or ~$43M, far from the $200M estimated by
NTKI's underwriters. Therefore, NTKI will incur losses well into
the next century, if it can last that long.
6. Balance Sheet
- Company did not disclose cash status in its latest earnings report.
Total assets are $57M. Much of the IPO proceeds was used to payoff
debt and to "partners" such as AOL (paid $10M to AOL with IPO proceeds
out of $18M commitment)
- With its current loss rate, company will need cash infusion in a year.
7. E-commerce stock
- Ah, but this is an internet/e-commerce stock. Who said earnings are
important?
8. Target
- Realistically, target should be in single digit. But in this irrational
market and #7, I'll take $15-$18. (Shorted a bundle @$26 1/4 couple of
days ago).
There's more, but I don't want to take away the fun from your DD.
Regards,
Tom |
