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Gold/Mining/Energy : Buckey's Bottom Bounce Short Term Picks (CDN ONLY) -- Ignore unavailable to you. Want to Upgrade?

To: Shaw who wrote (2506)	2/7/2001 9:07:07 AM
From: David Carlson	Respond to of 5887

Personally, I share your bearish sentiment. One scary thought - Canoe appear not to have increased in traffic in the past 6 months. They are currently claiming 100 million page views per month across all their sites - they made the same claim in August 1999. see www2.cdn-news.com and adviceforinvestors.com IMO the internet flash in the pan is past => companies now need sustainable business models and real profit. If I read WWW's cash flow properly, they seem to have burned $7 million in the past 6 months, and currently have 1,100k in the bank. Their receivables and payables are ridiculously high - I don't understand that. In any case, business could not continue as it has - I think they perhaps are seeing Canoe as a means of turning their own company around. This is probably a good deal for WWW shareholders - otherwise the future looks uncertain. sedar.com As for Canoe, I am not aware of any public information on it - but we can do a 'back of the envelope' calculation. READ THIS WITH CAUTION - I am not an expert. This is very approximate and should certainly not be used without doing your own independant valuation When they restructured CANOE, www2.cdn-news.com , they reduced by 65 staff or 30% of its staff. This should leave about 150 staff remaining. Assuming $30 - 40k/yr, they have a salary burn of $4.5 to $6 million. Lets ignore overhead & capital expenses for the time being. Assuming $20/thousand page view of ad revenue, they would get about $24million in revenue/yr. I am sure there are other sources of revenue as well - sponsorships, 'advertorials', commissions on product sales etc - however I am also sure that they are not getting $20/cpm for 100% of their inventory. So lets assume they get about $20 million/year in total - this leaves about $15mm in profit before tax - assume either tax of 50% or depreciation of programming/ hardware/ goodwill of the same amount and earnings are about $7.5 million. Ongoing operations of Netgraphe will reduce this figure until they stop the red ink at that group. This is about a 60 p/e - a bit aggressive in this market IMHO. Should this go through, I am looking forward to seeing Canoe's actual statements.