A big 1800 shares traded on this one today ... barely a blip. As I have debated with some on the Yahoo! message boards, this one has some long-term merit, but I wonder about the slowing growth rate when you exclude the now-sold CliqNow! division out of Q1 results. Any opinions on why this stock is not being included with the Internet run-up? Sure, it's a small cap, but it's amazing how the term "Internet big-cap" seems to include companies along the lines of Lycos, Infoseek, and Excite that still have less than $100 million of annual sales!
With a market cap of $15 million, including holding $4 million from the CliqNow! sale, KTWO is not seemingly overvalued. Yet, growth of their core business has certainly slowed; this had been masked by the tremendous revenue growth of CliqNow! before being sold.
One potential play: if the company that purchased CliqNow!, called 24/7 Media, has a big jump on the first few days of trading, KTWO will immediately benefit. Here's why: KTWO's $3 million of preferred shares is converted at the price of the IPO. Thus, if 24/7 is priced at $12, KTWO will get 250,000 shares. If 24/7 jumps the first day to $20, KTWO's shares will become worth $5 million. A $2 million increase in KTWO's shares could translate to a 1/2 point move in the stock (a 1/2 point represents about $2 million in market cap) - a big percentage mover by any measure.
Jeff |
