GMGC Financial Analysis
I did this on the back of a napkin this
morning. We now have enough info to make some swags
at 1999 revenue, eps and possible Street valuation.
Assume:
- 400,000 subscribers end of 1999. This represents less
than %1 of the target market. Given that this will be
after a year of intensive Satchi advertisement, lots of
free PR and tens of millions of people hearing "Hi this is
Portico" when they call someone, I think this 400k
number is very conservative.
- Assume no issue with scaling the NOC to handle this
traffic. By year's end, my understanding is that they'll
be able to support >200k subscribers (two NOCs), and given that
the NOCs scale easily, this again seems conservatively
reasonable.
- I've been told that the average subscriber uses almost
500 minutes. Let's assume that this goes down to 300 minutes
by '99, again, just to be conservative.
- Given the official pricing, the best pricing for 300 minutes
would be the $50 rate. Everyone takes that.
- Let's completely disregard any other revenue source.
Specifically, zip '99 revenue from:
- Agent tools (Microsoft)
- WebTalk
- MagicPhone
- Licensing deals
- Datarover
- Content forwarding
All revenue comes from Portico.
- Assume resellers get 20% of gross revenue (I think this
is extravagent, but let's go with it). Assume 3M NOC cost
for each 100k subscribers (am told this was the cost for first
100k).
- Totally ignore gmgc 150M tax credit.
- Assume 30M shares GMGC at end of '99.
Revenues:
240M total annualized revenue [400k subscribers * 50 * 12]
192M gross (after reseller) [240M - (.20 * 240)]
Expenses:
9M NOC Expansion cost [(3 * 3M)]
12M NOC admin [(1 * 1M * 12)]
34M Employee loaded labor [200 employees *120k/ll]
10M G&A
10M Telephony charges
20M Mkt&Advertising
6M Content Fees
101M Total
Net
~60M net [192 - 101 - .3 tax rate]
EPS
2.00/share [60/30]
In my mind, this gives a target price of GMGC ranging
from $40 (assuming conventional blue-clip ratios) to
>$100 (assuming high-tech growth ratios).
Of course, these numbers may be very low, giving
I purposively slanted things very conservatively
in this analysis.
Probably the weakest part of my model is the expense
side. I'd be interested if anyone has a different
take on these numbers. Also, ideas about
expected revenues from the other sources I discounted.
Sea Otter |
