Its not new info, but a different take on old stuff...
Quite a while back, Byron did some calculations on where he felt that the DGIV share price should go based on known and assumed revenue figures from PR's released by DGIV. Here is a link to a copy of that post:
exchange2000.com
I would like to take a much more conservative stab at the same thing.
My approach will be to use only dollar figures as released by Digitcom through their various PR's. All agreements where no dollar figures have been released will be ignored (I told you it was conservative!).
Some general comments first:
Because the figures are a combination of gross and net revenues, an individual contribution approach is taken. The number of outstanding shares are taken to be 18.1m, from post:
exchange2000.com
And the multiples used will be 20 on revenues and 50 on earnings. These multiples were used by Liberty Capital before their association with DGIV was terminated. I would provide a link, but the page has changed since then. Use different multiples if you feel it more appropriate.
To the calculation then...
1) The following PR (April 16, 1998) indicates that Digitcom had a net income of $292,585 in 1997.
biz.yahoo.com
If one assumes that they can achieve the same figures from their old business structure as they did in 1997, with no growth, and applying the multiplier of 50 and the 18.1m outstanding shares, one gets the following contribution to stock price:
$292,585
------------ x 50 = $0.81 per share
18.1m shares
2) Another PR, released on March 13, 1998, indicates that Digitcom reached an agreement with Louis International Telecommunications & Equipment. The agreement will provide $1M per month in revenues to Digitcom's U.S. telephone switching facilities with 90 days of signing.
biz.yahoo.com
Assuming that the revenue stream started at the beginning of July, $6M in revenues will be received in 1998 from this source. The multiplier of 20 should be used in this instance.
$6M
------------- x 20 = $6.63 per share
18.1 m shares
3) Later, a PR was released on May 1, 1998 that it had signed a letter of intent to acquire PT. Erakomindo Puranusa in Jakarta. Contracts in existence at the time of acquisition guarantees Digitcom $40-50M in net earnings over a period of 10 years.
biz.yahoo.com
Assuming that some of these contract revenues are backloaded and that only approximately 6 months would remain in 1998, lets use $1M as the figure for net earnings from this acquisition in 1998. The multiplier of 50 should be used in this instance.
$1M
------------ x 50 = $2.76 per share
18.1m shares
This yields a total of above $10 per share.
And using these multiples and assuming they only had these deals in place for 1999 (with some adjustments for additional Indonesian revenues), the share price would come out to ~$20 per share.
(If you don't like my assumptions, try adjusting the figure for different multiples, revenues and outstanding shares.)
... And remember, this totally discounts revenues from the POP in Australia, the revenues received from acquiring the Indonesian ISP (link to PR has expired), the revenues from the targeted 1m minutes per month (in the first year of service) in combined switched long distance and Internet voice transmission from the Republic of Mordovia and the expected revenue increases (over that established by contract already) via PT. Telkom for enhanced services in Indonesia.
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It also ignores prospects of additional revenues from the offices they have opened in Russia that targets the Russian Federation and in the U.A.E. targeted for the U.A.E, Yemen, Syria, Lebanon, Brazil & Argentina.
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It also ignores the efforts that are now underway in Germany to build an Internet Protocol telephony network in Potsdam, as well as the efforts underway in the Phillipines, Saudi Arabia, Egypt, Jordan, Dubai, Balkan States, EC, Countries around the Mediterranian, Taiwan, Japan, Korea and Viet Nam.
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exchange2000.com
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IMO, with all that is going on, the $10 share price is ridiculously low.
Now, the question arises, why isn't the DGIV share price more now. I think Ronaldo summed it up nicely in a post today:
1) Discount due to the risk associated with being OTC listed
2) Discount due to being a non-reporting company
Both of these impediments to the share price rising will be removed "soon."
For the reasons given above, I am holding long and adding shares as I am able.
Now, just so that nobody will accuse me of hyping...
"This discussion of DGIV's share price by Lazarus Long includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this release, including without limitation, Digitcom's business strategy, plans and objectives, are forward-looking statements. Although Lazarus Long believes that the expectations reflected in such forward-looking statements are reasonable, he can give no assurance that such expectations will prove to be correct. Factors that could cause actual results to differ materially from Lazarus Long's expectations include, without limitation, Digitcom's ability to negotiate final terms of the transactions described on favorable terms, if at all, and general economic and competitive factors."
My name is...
Lazarus Long and IAMADGIVAHOLIC. |
