XNET, Where we are, Where we're going;
Now that the Web site is up & I've had a chance to digest the information contained there & in the Press Release, I thought it would be good for me to give you my perspective of what this all means. ( I hope a few of you still care)
1) Financials are dated on the Web Site... un-audited 9 mo ending Sept. '98. Subscriber base was only about 12,000 on 9/98 & currently at least 20,000 and growing rapidly. The audited Financials that will go into the SEC 10 will be more meaningful. I suspect the current revenue projections will be closer to those posted by Francois see:
Message 8622248
Even the dated financial information is substantially greater that those recently reported by IMOT.
2)Subscriber growth & revenue growth should be exponential. From 12,000 to 20,000 subscribers in 6 months represents a rate of growth of 120% per year. Do you think this will accelerate with 2 new cities coming on line in the 2nd quarter of '99.
3)How does Wall Street reward ISP's with revenue growth? AOL is projected to grow revenues at an annual rate of 50% this year. Their Market Cap is $172 Billion on $4 billion of projected Revenues & a P/E of 762, by far the highest of all the other stocks in the DJIA. For comparison GE has a Market Cap of $370 Billion, Pays a quarterly Dividend of 35¢/share, and has a P/E of 40; IBM's MC is $168 billion.
4)Up side potential; If the stock price of AOL were to increase by 400%, it's market cap would be $680 Billion, more than $200 Billion > than the mother of all stocks, Microsoft. If XNET's MC went up 400% it would be ~$200 million, hardly a pimple on the butt of AOL's.
5)Flea Market Announcement; This could be Big in the Chinese market. "EBAY of China" is probably hyperbole, but has a nice ring to it. Ecommerce will also be up & running soon.
6)The NASDAQ listing application is also a big plus. I suspected this was in the works and was confirmed by my email response from Mr. Cheung yesterday. I suspect he's also working on one for CBET with their NetNation acquisition, so this should be a piece of cake.
7)The $5.5 million in restricted financing will have a dilutional effect on our shares (We'll have to see the specifics in the SEC filing) Hopefully this was secured at the stock price recently, but at any rate, since the shares are restricted, they can't be dumped out into the open market for at least a year. (By then, they probably won't want to.) This is a necessary evil to allow XNET to grow into new markets (2 of the 4 planned cities to come online soon) If AOL hadn't lost $5/share 2 years ago to finance expansion, who's knows where they would be today.
8)Speculation about AOL entering (or another ISP) the Chinese market. How would they do this? First they'd have to secure an ISP license from the government. I suspect it might be easier for them to buy an existing ISP (like XNET) than to work around the bureaucracy. I also suspect it would be easier for them to acquire an existing Web Portal familiar to the Chinese (such as chnmail.com )than to try to learn about Chinese culture & language from scratch. It makes sense to me that they would be contemplating entering this market, since they have largely "tapped out" on the maximum growth rate in the US & Europe, and now are looking for markets that they anticipate will experience the kind of growth that could justify their current stock price.
Hope this analysis makes sense to some of the investors long (like me) in XNET. Any comments would be appreciated. |
