The company has until May 15 to file its first quarter 10-Q with the SEC. I do not think that they will be releasing updated subscriber numbers during the quiet period. We may see some updated numbers when the analysts initiate coverage.
I agree with you that ONEM is undervalued relative to its competitors. Bearing in mind that I am using 12/31/98 subscriber numbers, as of Friday's close ONEM, ELNK, FLAS, GEEK, MSPG and PRGY were being valued at $2,024, $1,971, $2,856, $3,369, $2,373 and $3,291 per customer, respectively. Several comments related to these valuations. Note that I have adjusted the MSPG valuation to reflect the acquisition of Netcom at the end of 1998. Also, while my GEEK valuation is based on the 53,500 subscribers that they disclosed in their most recent SEC filing, I have seen a reference to an Ameri-First report that pegs their current subscriber base at 74,000. If you use this updated number, GEEK's customers are being valued at $2,436 each.
Another factor to consider is that ONEM intends to make additional acquisitions. MSPG acquired Netcom's 421,000 customers for $245.0 MM in cash and $30.0 MM in stock. That works out to $653 per customer. I have seen references to other acquisitions that are priced around $1,000 per customer. These types of deals are instantly accretive to the valuation.
I would argue that given its growth rate, ONEM deserves a premium to the other ISPs. I completely missed this point until you brought it up. Conversely, maybe the market is saying that there needs to be some sort of discount until they sort out the integration issues and the issue of additional compensation is clarified. I vote for the premium. On the short term, I see the stock recovering to the high 30s and then moving into the 40s when analysts initiate coverage. Assuming that neither the sector nor the overall market collapses, this stock could easily double over the next six months.
My use of the $1,400 per subscriber number only related to the initial pricing as set by the underwriters. I never expected the stock to actually trade at that level. |
