| An SI Board Since July 2000 |
| Posts |
SubjectMarks |
Bans |
Symbol |
| 16 |
6 |
0
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GNET |
| Emcee:
Puck
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Type:
Unmoderated
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REGISTER YOUR PROTEST OF THE MERGER HERE
I have been a GNET shareholder for more than two years, I use many of GNET's services quite happily, and I love this company and its stock. I am violently against its sale, if you can call it that, to Infospace because I believe the price is grossly unfair. GNET is a perfect little company as it is with a demonstrated, beautifully internet centric business model (as Steve Harmon would say) and awesome profit margins, making it the rarest of internet birds. I project that GNET will earn close to a dollar a share this year, giving it PE based upon 2000 earnings of around 50-60. I believe that the valuation of GNET's stock would expand substantially over the winter and into next year were it to remain independent resulting from its broadband roll-out on Paul Allen's cable systems because of the attendent attention and recognition GNET would receive for doing so. INSP on the other hand has not demonstrated its business model yet. I have no idea what INSP's revenues are projected to be this year. I'll guess $150 mil. to be fair and in keeping with its steep rev. growth curve. This may be quite an overestimation given its Q2 reported rev's of $25 mil. but I'll give INSP the benefit of the doubt for the sake of argument. Even if INSP then meets this lofty rev. goal for the year, its stock is still at about a 50x rev's multiple. The time has passed when analysts could convince the investment community that companies losing money or with insubstantial earnings should enjoy such revenue multiples in their stock prices, which is to say that INSP stock, even given how far off its yearly highs it is, will most likely prove to be grossly overvalued even now. Maybe it won't, but we, as GNET investors who are now forced to view INSP stock as currency, must be conservative in our estimation of its value on principle for our own self-interest. This merger looks compelling from a business standpoint, which is why management supports the deal, but not from an investor's standpoint in the balance of what we are receiving in return for what we are giving up. GNET is a great company for its owners as is, and I see no reason for us to exchange our shares for shares in another company whose EPS is not at least commensurate with ours or else a premium in cash. We are giving away arount $1 in 2000 EPS for no EPS and an unproven business model. And don't forget the $400 mil. in cash and investments that GNET has as well, making INSP's purchase price that much less than it appears. At the very least GNET shareholders should receive a collar guaranteeing the value of INSP shares they receive. We may all find out quite painfully that the extreme valuations of mobile commerce companies goes the way of internet company valuations in general. Maybe INSP's rev. multiple will eventually settle at 40X, or 30x, or 20x, or 10x... Who knows. But I do know that we are giving up one awesomely profitable company whose businesses utilize all the advantages the internet confers maximally for stock in something whose future profitably is ambiguous at best and whose stock may well prove to have been grossly inflated creating a grossly unfair exchange for GNET shareholders. IT'S THE PRICE STUPID! SHOW ME THE EARNINGS!
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