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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (30481)	4/22/1999 5:56:00 AM
From: Mr. Big	Respond to of 90042

BancBoston Robertson Stephens Initiates Coverage of VMIX With a Buy Rating SAN FRANCISCO, April 21 /PRNewswire/ -- BancBoston Robertson Stephens senior information and business services analyst Andrew W. Jeffrey today initiated coverage of Valley Media, Inc. (Nasdaq: VMIX - news), with a Buy rating. Valley Media, headquartered in Woodland, Calif., is a music and video distributor with facilities in California, Kentucky, Pennsylvania and Massachusetts. ''We are initiating coverage of Valley Media with a Buy rating and a 12-month price target of $40, as we believe the company is well positioned to drive growth in all of its business lines,'' said Jeffrey. ''We view Valley Media as the premier value-added distributor of music and video products. The company possesses a robust traditional distribution business, as well as the tremendous revenue producing potential of on-line music and video sales through its New Media division.'' My opinions: A take out play by a large video-music firm would make sense to me, similar to how ingram was taken out by barnes and noble Etailers are going to want to own the value chain end to end I believe amazon.com may be one hunter on that list, and certainly one able to do the deal given its rich stock currency My VMIX target is $50 - more details here --> In 1998, the company saw sales to Internet retailers soar 542% to 113 million, accounting for approx. 20% of total sales(New Media, our Internet sales, support and data division, is our fastest growing business. Its revenues increased 542%, from $17.6 million in the nine months ended December 1997 to $113.0 million in the corresponding period of 1998. Access to our extensive catalog is particularly valuable to on-line retailers as their customers tend to buy higher proportions of deep catalog titles relative to hits than do traditional shoppers. We have developed databases that serve as an integral part of Internet retailers' product information and ordering systems. Our value-added services enable Internet retailers to outsource operating capabilities instead of making the substantial investment to build their own inventories and infrastructure.) Assuming that the deal prices on the high-end 0f the proposed $12 to $14 range, VMIX would carry a trailing Price/Sales ratio of 0.2, compared to a P/S of more that 30 sported by Amazon.com and 5.17 by CDNow. And although VMIX's gross margin is roughly half that of Amazon.com's, the company managed to turn a profit of $2.6 million or $0.49 a share, compared to Amazon.com's loss of $74.37 million. only a 3.5 million share float valley-media.com