Jimmy, this is an excellent start at attempting evaluation of JNNE. I would use slightly different numbers, and address only revenues since the profit structure should be assumed to be like in many profitable business no better than 10% of sales after tax. If it was much larger than that (and even at that) intense competition will ensue. You have to remember that there are no big barriers to entry in this business and companies already owning public phone could easily extend these to information kiosks. They have to do something that will make them unique, any idea what that might be?
Now to the numbers, if indeed they have agreements with 10,000 hotels, then I can accept your total population of 10,000 kiosks. What is the "backing for these 10,000 hotels and what kind of hotels are these, I thought that the only line up deal is with Day's Inn, and I do not think they have 10,000 hotels, but I may be wrong.
I think that $.05/minute is a rational choice for revenue. But I doubt that on the average each kiosk will be occupied more than 25% of the time, even that might be high and thus you will come up with 4 hrs per day (not counting the 8 hours between 11 PM and 7 AM). Even during "rush hours" use time (4 to 8 PM, you have to have few kiosks unused or you will develop "waiting lines" a business killer concept) you should not have 100% occupancy of the kiosks. Thus my sales per day come to just $12 and per year to 4400. Assuming 10,000 kiosks population sales will be $44 MM justifying with 60 MM shares a price of between $.75 to maybe $3 share (if growth visibility is high).
Of course, this is still almost a 10 bagger from here, but on the other hand, we have not taken into account the risks associated with currently less than stellar financing and thus the possibility of additional share dilution. The market is taking these into account and some large holders of shares appear to think that the current price is quite fair and they are thus selling into the rallies created by news releases.
Zeev
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