Fatt, I am still waiting for your "intelligent answer" on WCAP quizz!
Be careful how you handle the earning figures for XNET: I e-mailed this update and correction to Cheung and he is not yet completely comfortable with it. I expect an e-mail back from him to correct whatever mistake the report may contain. Remember, this is a forward looking earning projection into 1999, as real earning for 1998 are certainly lower.
Jeff, EXPLANATION OF XNET EARNINGS FROM ITS INVESTOR'S PACKAGE.
It has been said that my discussion on XNET earnings in previous posts involved non public information. Nothing is further from the truth: I called Mr Cheung at 604-689 4407, who sent me an investor's package which contained a brochure and graph of users of XNET services. I assumed these documents were publicly available and used them as follows:
1) From the graph: in January 1999, there were approximately 11,000 e-mail users and 7000 dial-up users, which respectively brought in average yearly revenue (from brochure) of $24.00 and $150. The calculation is thus:
11,000 x 24 = 264,0000
7000 x 150 = 1,050,000
Total forward anticipated yearly revenue (1999), based on the month of January 99 is: 264,000 + 1,050,000 = $1,314,000
2) The brochure mentioned 50% operating margins, but further research in the documents supplied, actually shows that operating income, net of expenses is, in round figures: 33%
Net revenue then would be: 1,314,000 x 33% = $433,620.00
Since revenue from other sources, such as ISP, internet operation , e-commerce is not quantified, I rounded that to $450,000.00, or $37,500 per month, which seems a reasonable net earning assumption, based on one month only of January 1999, going forward into the 1999 year. Obviously, this is an estimate only and the actual figures could be substantially lower or higher.
3)Why did the XNET share go up so substantially? Because, it used to be at 40/45 cents, and 14.2 Millions shares would give it a capitalization of less than $6 Millions, which seems kind of ludicrous for a profitable Company with great potential in an expanding market.
4) I assumed that the outstanding shares of 14.2 Millions are public knowledge. The float appears to be somewhere between 2 and 5 Millions.
Disclaimer: this figures may be totally wrong and I have sent a copy to Mr Cheung to correct any mistake. I am not an accountant and cannot be held responsible for any discrepancy, as I am doing this as a service to the investing community for which I have not been rewarded. It is my opinion only, so do not use any of this information for investment purposes and do your own Due Diligence.
I am long 30,000 shares in XNET.
Regards, F. Goelo + + +
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