Company, Analysts & Investors read this Valuation
by: Pure_Lip
16151 of 16180
Market Value ($229) + Debt ($112) - Net Working Capital ($155) = Enterprise value of $186MM.
Let's start with revenue. In the CC we were told that IDTC is ramping up revenues to over a $600MM run rate.
Conservatively, the revenue multiple is 0.3. Revenue multiples for Internet companies are usually more like 10
X. So IDTC would need to be a 33 timer to be par with the market (agreed that alot of their revenues are not
Internet related, but point taken, right?).
Net Income. REVISED July 99 numbers are $.37 per share (H&Q). So taking into account the earnings
shortfall, IDTC is still only trading at a 27 (blended trailing and forward). And this a a 27 PE on REVISED
numbers and for a company that is growing at well over 100%.
Net2Phone. Remember, IDTC is worth $186MM. Moore from BT Alex Brown said in December that
Net2Phone is worth "at least $200MM". I believe Jonas said more like $500MM. An analyst on the CC said
$1BB in 3-5 years. So conservatively, our valuation says that IDTC's other 98% of revenues (and the
infrastructure, technology, etc.) are worth nothing. Sure, that makes a lot of sense.
ISP. OK, ELNK and MSPG have MVs of about $2.0BB and $2.6BB, respectively. They each have about a
million subscribers. So let's be conservative and take ELNK's $2.0BB divided by 1MM subscribers, yielding
$2,000 per sub. Let's take a substantial discount because of their size and growth rate, and go with $1,000
per sub. IDTC has 75,000 consumer ISP subs. So they are worth $75MM. OK, so we sell that off next week (I
think that will happen, IMO) and the rest of IDTC's business (including Net2Phone) is worth $111MM. OOPS,
forgot the backbone. Oh, and the ~300 corporate Internet customers. That's $50MM for a fully-peered, Tier 1
backbone (try starting one of those)and $5MM for the corporate subs. So if IDTC completely exits the ISP
business, the rest of IDTC, including Net2Phone is worth $56MM. [They will keep the backbone / data
network, IMO].
E-commerce. IDTC has hundreds of Click2Talk e-commerce deals. Better put a premium on the Net2Phone
valuation.
Portal. IDTC has about a community of about a million subscribers. That's par to ENLK, MSPG, EGRP, etc.
Better put another premium on the Net2Phone valuation. And everyone knows the valuations for communities
(XOOM, Geocities, The Globe, etc.) and search engines.
So anyway you look at it -- revenue multiple, PE multiple, Net2Phone valuation, ISP value, E-commerce,
portal -- this stock is undervalued by an order of magnitude. That's right. $1.86BB makes a lot more sense
than $186MM. That's a 10 timer, so see you at $100 per share.
CHEERS
|
