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Technology Stocks : Source Media SRCM

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To: Smilodon who wrote (2575)	6/4/1999 2:43:00 PM
From: MW	Read Replies (1) of 3015

so we're getting somewhere. <<Given SRCM's stock price, that gives the JV a current implied value of $1.1 Billion. >> I disagree. You again are putting a zero value on the IT Network. The IT Network is going to provide content and advertising sales by contract to the JV for a fee. And if you're assuming full dilution for the above than you must credit the IT Network with the 200 million$ cash infusion. Bye bye debt, hello 100 million in the bank. And a profitable stand alone business with one very large new customer {JV} to boot. Hardly worth zero, I would think. <<A bit high for a startup in my opinion. >> In your opinion as you say. Consider TV Guide interactive now has 2 million customers and are adding over 5000 per day. They have a 10 year deal with TCI/ATT and their 15 million customers. They sell services currently to all 10 of the largest mso's as well as various other cable and satellite interests. The technology is available now and is currently being rolled out. On the contrary I think 1.1 billion is cheap. <<To me, if you really believe in the JV's potential, why not just buy TV guide? It has less risk and their share of the JV is not as fully valued in their stock price.>> 1. I own TV Guide. 2. Again I disagree with your valuation methods. Back to my previous example. If the JV gets valued at 5 billion, srcm's fully diluted value of it would be 1.35 billion. That would be a 6x return and again thats not counting the value of the IT Network. The value of the JV to TV Guide would be 3.65 billion or approx. 2x its current cap. Nice, but nowhere near the srcm return. Of course I acknowledge more risk with srcm but I don't think it's 3x riskier. <<The only other issue that I see is if the JV succeeds, but it takes longer than expected and consumes more capital. >> Fair point but I find that unlikely.

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