To All: An Undervalued Dog follow-up:
Part II: A Follow-Up for American Diversified Group, Inc. (OTC.BB: ADGI)
On Febreuary 19, 1998, we recommended ADGI. The following is a follow-up ADGI due to its latest development.
On May 26, 1998, ADGI announced that its affiliate, Telephonetics Overseas Corp. of Miami (TOC), which has changed its name to Global Transmedia Communications Corp., has commenced marketing of new ''State of the Art'' Internet telephony services.
These new services, called ''Cheap Talk'' (http://www.cheaptalk.net), are available for both single line telephone (InfoTalk) subscribers and multi-line telephone (InfoGate) subscribers. Cheap Talk's basic service (InfoTalk) does not require a subscriber to use a computer and with InfoGate, there is not need for any additional equipment. Both services enable subscribers, as part of TOC's Internet telephony service package and an Internet access account, to make long distance telephone calls at very significant savings on a phone to phone basis, over the Internet.
In addition, InfoGate enables subscribers through a company provided gateway, to use four telephone lines simultaneously for voice, data, paging and commencing on Sept. 1, faxing. The company projects that InfoGate will have a significant impact on future revenues because faxing presently represents approximately 30% of long distance usage domestically and 50% of all long distance charges internationally.
In an issue of Money World magazine published in September 1997, an article entitled "On Top Growth Market of 1998" stated "a quite revolution started in 1995 with the introduction of Internet Telephony (voice-over-the-Internet technology). In three years, the global Internet Telephony market has grown from ground zero to nearly $800 million. And in the next five years, it is projected to soar beyond $60 billion. There is good reason for the spectacular growth. Advanced communications aspects of Internet Telephony makes conventional phone services outdated. Not just because of features like paperless faxing, voice mail, video phone, 100-call conferencing, and live chat groups. It is also a matter of price. With Internet Telephony, consumers can make long-distance phone calls for just the monthly cost of Internet access. Think of it: all the long distance phone calls you can make, yet your monthly long-distance phone bill will not exceed your Internet access fee (usual!
ly around $20/month). The saving is phenomenal".
There are very few players in the emerging Internet Telephony industry. Not even Lucent Technologies has a product on the market, But then, big companies are often slow to react. The timing is right-on-money for an adroit young company to enter the arena and capture key untapped markets. This is what ADGI can accomplish.
On the basis of projected revenues of $10 million from current businesses (telecommunication services: $3.2 million, pharmaceutical products: $2.4 million, and medical products: $4.6 million in West Africa and South America) in 1998, the new Internet Telephony business will add $5 million net incomes for ADGI in 1998. EPS is projected about $0.05/share for 1998. With this recent development, ADGI shares are ready to move up with huge upside potential. The target price for ADGI shares is in a range of $0.20-0.30/share in a short term (1-6 months) and in a range of $0.50-0.60/share in a long term (6-24 months).
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