As anyone who follows Peter Lynch knows, he is a strong advocate of the theory that some of the best all time investments can be found by looking around you in your everyday life. Which (actually is not how I got interested in this stock) but it is certainly appropriate here.
The company is NETCOM ON-LINE COMMUNICATION SERVICES INC. NETC. If you're reading this, you are either using or could be using their product.
NETCOM On-Line Communication Services, Inc. is a leading international Internet service provider with seven years of network experience. Leveraging its own high-speed nationwide TCP/IP-based network, NETCOM provides a range of value-priced Internet services for individuals and businesses.
NETCOM shares are traded on the NASDAQ under the symbol NETC. They are sharply off of their 52 week highs, and represent an outstanding value with substantial appreciation potential from current levels. The Internet is growing at a phenomenal pace and is quickly encompassing many facets of our daily lives both personally and professionally. NETC is uniquely positioned to capitalize on this growth as either a stand alone company, or as an aquisition candidate from one of the major players (AT&T, TCI, etc.) that prefers to "buy" there way into this market. Now for the numbers.....................
For the nine months (ending 9/30/96), NETCOM reported revenue of $84.2 million. A 157% increase from a year ago revenue of $32.8 million. Now thats growth! NETCOM had cash and cash equivalents of $86.1 million, working capital of $65.3 million, total assets of $181.5 million, and stockholders' equity of $155.2 million.
The shares are currently trading at $15.25 per share (12/20 close).
52 week high is 44.50, 52 week low is 12.50. (The stock traded as high as $91.00 per share during the Internet frenzy in late '95!)
Subscribers were at 562,000 at the end of the third quarter representing an increase of 141% from the year ago period. NETCOM is expected to add approximately 30,000 during the current quarter.
NETCOM has over 235 Points of Presence (POP's), which are local access points in all major metropolitan cities throughout the U.S. In addition, the company has expanded its operations internationally to Canada and the U.K., and plans to continue expansion internationally.
This discussion would not be accurate if I did not point out that NETCOM is not profitable yet. They are fully expected to close '96 at an Earnings per share of -$3.40. This is understood by the investment community, and is not of major concern. For a complete discussion review company news, particularly report of 12/19/96 where company discusses change in direction to go after small business market over mass individual (unlimited $19.95/mo.) market, and to offer more value-added services at higher prices. NETCOM in fact announced that it expects to be profitable at least one quarter ahead of consensus (and company) prior estimates.
As far as target price for the shares, this time next year, and possibly a lot sooner NETCOM will be a $30.00 stock for a gain of 100%. The other factor is the aquisition speculation that has been circulating for sometime (see posts on stock talk). Buyout price would be at least $26.00-$30.00, but could possibly go higher, as this is a valuable business with incredible growth potential well into the next millenium.
Good Luck and Happy Holidays to All |
