I spoke to Josh Eikov, new CEO of Erawest (ERAW) - big news!
The bottom line on ERAW is that it is extraordinarily over sold, making it a rare example of an internet value stock.
What Mr. Eikov said:
He hopes to make announcements about cleaning up ERAW's act this Wednesday (Mr. Hinson is gone, Mr. Flowers is on the way out).
They plan to release accounting numbers around the end of January.
They expect to approximately break even (i.e., earnings are covering the costs of recent acquisitions). He expects future earnings to be way positive, like all CEO's I suppose.
Most importantly, he acknowledged that the deal with GEM was a big mistake, and they are extricating themselves from it as much as possible (essentially, the deal was structured in a way that made it profitable, near term, for GEM to run down the stock price, which they've been very successfully doing).
I think these are all very positive developments. Once the fresh air has blown away the clouds hangin over this company, it will be clear that on the basis of fundamentals it's worth at least $5 per share (and 10 times that as a potential internet bubble stock, of course).
ERAW, Erawest, owns dynamic bell in Australia, Net2phone, Digicon, and UAT.
UAT alone, which is a small part of ERAW, is projected to bring in over 90 cents/share next year and $1.90 the following year (see press release below).
ERAW ipo'd at around $6 two years ago. ERAW was almost bought out a year ago, probably by an Asian company, for $26 per share, but the Asian crisis spoiled that, and lots of shareholders were burned. After the deal fell through, the former CEO, Hinson, basically lied for months that it was still going to happen, to keep the stock price pumped up. It slowly become clear that the company will not be bought out, so all those shareholders looking for a buyout drifted to the exits over the last 6 months. GEM finished the job of running this stock into the ground.
As a result, the price has now been driven down to 50 cents (from above $7 two months ago, with no negative news). At current prices, in six months ERAW (a telecom internet company!) will have a PE less than one!
CLEARWATER, Fla.--(BUSINESS WIRE)--ERAWEST Inc. (ERAW) (OTC:ERAW - news), an
international provider of telecommunications and Internet services, announced today the signing of a binding Letter of
Intent to acquire United Africa Telecom (UAT). United Africa Telecom is in the business of providing local, long distance
gateways and wireless telephone service in hard to reach, developing countries, such as Guinea, Sierra Leone, Liberia,
etc.
This acquisition of United African Telecom should bring operating cash flow to ERAWEST, Inc. of $9,125,000 (USD) in
the first year. This would equate to approximately $ .90 in earnings per share. In year two, operating cash flow should be
$19,870,000 (USD), (this does not include additional countries that should be up and running) this equates to $ 1.90 per
share. In the next three to ten years we expect cash flow from the operations to grow at a rate of 15% per annum. |
