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Non-Tech : Image Entertainment (DISK) -- Ignore unavailable to you. Want to Upgrade?

To: Modano who wrote (140)	7/1/1998 5:38:00 PM
From: William T. Katz	Read Replies (1) \| Respond to of 379

Well, we have increasing volume for the last 3 days and increasing price ... looks good. There is the rumor of some buyout of an internet e-commerce company (according to Honda), take that for whatever its worth. But here are what we can count on: Pros: 1) Technicals look good. 2) Stock has market cap less than $100 million. 3) Practically every single e-tailer has market cap significantly more than DISK, esp. for the music retailers (CDNW, NTKI). However, I'd imagine margins on DVD to be higher. Also, DISK, as a distributor, already has the warehouse and some exclusive arrangements. 4) Laserdisc is dropping off a cliff but soon all those laserdisc fans will have one main source, DISK. DISK will own one niche market through direct internet sales. 5) All things "internet" are going through the roof. There seems to be absolutely no common sense ... SWNT (software.net), for example, has much less revenue than DISK yet sells for over 20x annual revenue! 6) DVD market is growing very rapidly. Everything I see tells me this market is on the verge of booming. By this xmas things will be in place for a healthy read-only format. By next year, I'd expect VCR-replacements using DVD to be reasonable in cost. Cons: 1) DISK is limited to domestic distribution by some of their contracts. Anyone know which contracts are purely domestic? 2) Laserdiscs will continue to hurt them until DVDs pick up the slack totally and they can get online ordering direct. 3) Cash? Conclusion: There is an explosive upside (a la K-Tel and software.net) tempered with the fact that they are not a retailer per se. However, their distribution of DVD provides them with a solid core business that should grow significantly over the years. Laserdiscs will continue to hurt them but direct internet sales allow them to make this misfortune a blessing, perhaps, by becoming the (only?) direct retailer of laserdiscs.