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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today -- Ignore unavailable to you. Want to Upgrade?

To: LT who wrote (5996)	5/25/1998 8:14:00 PM
From: James Harold Alton	Read Replies (1) \| Respond to of 19331

Hi Lou, Good post, and I agree with all of your points. I sure would like to see Murphy on the Warpath with a fat wallet (and some $4+ stock for that matter (G)) to see what he can really do for us. (G) I was looking back over the Corinthian Capital Group analysis that was done on DCI a while back since I recalled that we had been compared to a number of other Telecoms and wanted to see what I might find there. In that analysis, they used 5 other Telecoms whose Price/Sales ratios varied from 1.3 - 3.5 to derive an average of 2.5. If we apply this 2.5 average to the "revenue per share" ( same as Price to sales unless I am missing something here) numbers I came up with earlier, we get: For DCI: FY: Expected share price: 1996 $1.05 1997 $1.40 Current revs. $3.18 For SMTK: 1997 $7.83 (for reference from my earlier post) Note that DCI's fiscal year ends 3/31, so the years below are for the period ended) Fiscal year ended: Total revenues: Revenue per share: 1996 814,016 42 cents 1997 2,793,948 56 cents current 23,924,000 $1.27 ## Smartalk 1997: 72,000,000 $3.13 The current figure is derived from the 12 month consolidated numbers from the 8-K on Edge and I have added to this number the $7 million mentioned in the news release on Cyberfax. No revenues were assumed for DCI-UK and no adjustment was made for the hoped for increase in Mullers revenues, so I feel this number is very conservative. What I find interesting is the fact that SMTK does not appear to be trading at the 2.5 Price/Sales ratio, and is fact actually (at $21/share) trading at a 6.7 Price/Sales ratio. The Corinthian report focused mostly on LD companies, so perhaps the prepaid phone card sector demands a higher ratio? The Corinthian report discounted our anticipated share price by 25% due to not being listed. If we apply SMTK's 6.7 Price/Sales ratio and adjust for this 25%, we get considerably higher prices: For DCI: FY: Expected share price: (at 6.7 P/S less 25%) 1996 $2.11 1997 $2.81 Current $6.38 For SMTK: 1997 $21 One thing of real interest to me is that the $2.11 for 96 and the $2.81 for 97 were actually a fairly good average of our share price during those years. What doesn't fit at all is the current share price, which should be higher based on our own history it appears to me. SMTK has fallen from it's high of $36.50 to the $21 level so must have at one point been trading at an even higher P/S than 6.7. Since DCI is in many different sectors, I don't know for sure what would be a good P/S number for us to apply, but it sure looks like anything in the range of the Corinthian reports 2.5 to SMTKS's current P/S of 6.7 makes us look undervalued at these levels. It will be interesting to see if the general market agrees with any of this given time. (G) James