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Microcap & Penny Stocks : XSNI - X-Stream Network -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey D who wrote (408)	5/12/1999 2:01:00 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3519

Nice find Jeff. At an exchange rate of 1.625, 600.0 MM pounds converts to $975.0 MM. That values each of the 320,000 XSNI subscribers at $3,047, which is a substantial premium over the valuations currently being assigned to U.S. ISPs (ELNK, as an example, has a market cap of $2,065.0 MM and 1.115 MM subscribers. Each of those subscribers is being valued at approximately $1,850). Divide the $975.0 MM by the 34.0 MM XSNI shares that are outstanding and you have a value of approximately $29 per share. I want to emphasize that the above calculation does not even rise to the level of an opinion on my part and I would not advise anyone to make an investment decision until we have some additional clarification as to how to value a free ISP. I have simply crunched the numbers based on the information that is currently available to us. Some piece must be missing as I find it hard to believe that the market can be that inefficient. I have the feeling that I have made some massive math blunder here and that I may have to start posting under an alias. I hope that Jacalyn reads this post before she calls London so that she can enquire as to the appropriate benchmark for valuing individual subscribers. Interestingly enough, the Express article, which is using Freeserve as a benchmark, ties into a "Wired News" article that I found and posted over the weekend. The "Wired News" article actually puts a higher valuation on Freeserve. "Freeserve May Go IPO" (4/12/99) wired.com Reuters 12:15 p.m. 12.Apr.99.PDT LONDON -- Dixons Group, Britain's biggest consumer electronics chain, said on Monday it's considering selling a portion of its Freeserve Internet service in an initial public offering. Dixons revealed it was considering how to optimize Freeserve's value,including an initial public offering of a minority stake. The firm appointed Credit Suisse First Boston and Cazenove & Co. to look into the options for Freeserve, which was launched last September and has rapidly become the United Kingdom's biggest Net service provider with more than a million subscribers. The success of Freeserve turned Dixons into an Internet star, nearly tripling its share price and helping to propel the retailer back into the FTSE 100 index of blue chip UK stocks. Dixons' chief executive John Clare said the company had decided to look at the options for Freeserve to help realize its potential. "The Internet is a rather different market and we think on the face of it there is some merit in Freeserve having its own currency to do joint ventures or maybe make acquisitions," he said. But the chief executive could give no further details on timing of a possible float, or on whether Freeserve would go for a listing in the United States. Clare said there was clearly a market for Internet stocks in the United States, where Net giants like America Online and Yahoo have seen phenomenal stock gains. "Whether there would be a market for Freeserve in the States I don't know -- they don't know much about us," he said. Retail analysts have estimated Freeserve could be worth between £4 billion pounds (US$6.47 billion) and £5 billion pounds, based on growth prospects and market values for comparable stocks such as AOL. This would put an estimated value of between 925 pence to £10 per share on Freeserve. Dixons still looks cheap compared with US Internet stocks, which trade on huge earnings multiples. "There's a lot of upside still in the share price," said retail analyst Nick Bubb at SG Securities. Freeserve's rapid growth spawned a whole range of rival UK free Internet services, including supermarket group Tesco, British Telecom, and even the UK's top-selling tabloid newspaper The Sun. But Clare said these had had no direct impact on Freeserve, which had already established itself as a strong brand and was offering a growing range of services. Back in January, Dixons had said it might consider a float of Freeserve at some point. Dixons operates the service in partnership with telecom firm Energis and its Planet Online Internet supplier.