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The original version can be found at http://www.techstocks.com/~wsapi/investor/newsletter-25 Medialink Worldwide Geoffrey Eiten of OTC Growth Stock Watch otcgsw.com provides the following stock idea on Medialink Worldwide (MDLK 20). Below is the write up. BUSINESS SUMMARY "Medialink is the world leader in providing video and audio production and satellite distribution services to thousands of television and radio stations for corporations and other organizations seeking to communicate their news to the public. Medialink produces video news releases (VNRs) and distributes them via satellite to more than 1,000 television newsrooms worldwide. The company also offers a full range of radio production, distribution and print services and provides research and analysis to determine service effectiveness and assess return on investment. The company serves more than 1,300 clients including dozens of Fortune 500 and Fortune 100 companies. Founded in 1986 and based in New York, Medialink maintains offices in Los Angeles, Washington, DC, Chicago, Dallas, Atlanta and Norwalk, CT; international headquarters in London; and a network of affiliates in more than 17 countries in Europe, Asia, the Pacific Rim and Latin America. Medialink concluded its Initial Public Offering on February 4 of this year to become the first public company in the PR service industry. INDUSTRY OVERVIEW The worldwide market for Medialink's services is estimated to be $500 million and is growing at an annual rate of 20% to 25%. In addition to international deregulation of the airwaves for television and radio, there are two main forces fueling this growth: First, television and radio broadcasters have an unquenchable need for material. The demand for broadcast media news programming has grown to some 2,100 hours of television news per day, while radio programmers must fill an incredible 31,000 hours per day. Medialink provides television and radio stations with quality audio and video to fill those hours at minimal cost to the stations. The second force driving Medialink's growing market is the thousands of corporations, organizations and individuals seeking to influence public opinion and consumer behavior through television news. These clients and potential clients are increasingly looking to outsource public relations work to competent and cost-effective agencies. In fact, outsourcing of public relations services has been growing at an average annual rate of 25% to an estimated $625 million in 1996. Television is a powerful medium and studies show that its influence on consumers and viewers is much greater than that of either radio or print. A study done in 1994 by the Roper organization found that 72% of Americans get most of their news from television and Americans over 18 years of age watch an average of 30 hours of television per week. Getting one's message across as a television news clip rather than creating a traditional ad is another growing trend as the line between "news" and "advertising" is increasingly blurred. Since 80% of Medialink's business comes from VNRs, business is likely to remain strong. COMPETITION Medialink has a decided edge over the six or so private companies that offer services similar to those of the company. Medialink has developed a sterling reputation for quality and customer service and its staff is replete with top-notch media professionals. On the services side, Medialink is able to distribute VNRs via satellite to 700 television stations while most other companies rely on overnight delivery. The cost of cassette distribution, which is usually borne by the producer of the VNR itself, is much greater than that of satellite distribution and cassette distribution takes much more time. Medialink benefits from exclusive contracts with both the Associated Press and the ABC NewsWire. Medialink's satellite-fed VNRs are seen by station news personnel because the advisories are transmitted several times on the Medialink/AP Express Newswire directly into the newsroom computer queues or to a dedicated high-speed teleprinter. Medialink's exclusive agreement with ABC NewsWire enables the company to transmit the text advisories of Medialink radio projects into more than 1,000 radio newsrooms and provides Medialink with a direct data transmission pathway to all ABC NewsWire affiliates across the U.S. With its recent acquisition of London-based On Line Broadcasting and its several foreign offices, Medialink is the only company of its kind with international capabilities. Business Strategy Medialink follows a four-point strategy for growth that is both straightforward and intelligent. The company's goals are to: 1) seek accretive acquisitions and strategic alliances, 2) develop new services, either through acquisition or internally, 3) leverage its client base to increase the rate of repeat business, and 4) take an aggressive, yet deliberate, approach to global expansion. Medialink has had thirteen consecutive quarters of strong revenue and earnings growth Thus far, the company is satisfying these goals at a rapid clip. In June 1997, Medialink acquired Corporate Television Group, Inc. (CTV), a preeminent business video communications company whose clients include Microsoft, Philip Morris Cos. Inc., General Instruments, Compaq Computer, and others. The acquisition was immediately accretive to earnings (contributing approximately $600,000 in the first two weeks as a division of Medialink); increased Medialink's available services, and expanded Medialink's presence and potential abroad. In August the company acquired London-based On Line Broadcasting Ltd., a leading specialist provider of audio and video communications services. This acquisition enables Medialink to give its clients broadcast exposure in Great Britain and establishes a gateway to the countries served by British news networks. recent results Medialink has had thirteen consecutive quarters of strong revenue and earnings growth. The company has approximately $12.2 million in cash and cash equivalents and only about $260,000 in long-term debt. Revenues for the second quarter of 1997 increased 62% to $6,639,000, from $4,102,000 for the second quarter ended June 30, 1996. Net income for the 1997 second quarter of $729,000, up 143% over net income of $300,000 for the comparable 1996 quarter. Earnings per share for the second quarter reached 13 cents on a weighted average of 5,443,000 shares outstanding, an increase of 44% from pro forma earnings per share of 9 cents on a weighted average of 3,453,000 shares outstanding in the prior year's second quarter. For the first half of 1997, revenues were $11,062,000, 49% ahead of revenues of $7,431,000 for the first six months of 1996. Net income rose to $1,058,000 over the $495,000 recorded for the first half of 1996, an increase of 114%. Earnings per share rose 50% to 21 cents on a weighted average of 5,116,000 shares outstanding, over pro forma net income per share of 14 cents on a weighted average of 3,453,000 shares outstanding for the comparable period in the prior year. CONCLUSION Although Medialink has a relatively short record as a public company, its 10 year reputation for quality and professionalism has made it a world leader in video/audio production and satellite distribution services. Exclusive agreements with the Associated Press and ABC Newswire serve as huge barriers to competition, and the availability of stock with which to purchase smaller competitors leaves Medialink well positioned for growth through acquisition. The company's acquisitions thus far have furthered its goals of expanding the services it can offer as well as increased the company's international presence. With relatively little debt, approximately $12 million in cash, and a solid strategy for growth, Medialink should continue to dominate the worldwide market for public relations services." Dionex Corp. The Clean Yield provides the following stock idea. An annual subscription is $80 for 12 issues and you can contact them at 802-533-7178. Dionex Corp. (DNEX 49 1/2) is a recent selection from their newsletter. Below is the write up. "What do computer chips and chocolate chips have in common? For one thing, both require a high level of purity; for another, both rely on advanced chromatography to ensure their manufacture is contamination free. From pharmaceuticals to power generation, from environmental law enforcement to biophysics research, a glance at the cutting edge of applied science and technology reveals a near-universal thrust-isolating and identifying substances in increasingly minuet quantities. In rough analogy to the computer as a processor of data, the chromatography column is a ubiquitous laboratory tool for separating chemicals, and, like the computer, it is being called on in a vast and expanding range of fields. The growth in liquid and ion chromatography, in particular, is being sparked internationally from established applications, such as monitoring water quality. In the U.S., it is also coming form new uses, such as detecting ion contamination in manufacturing integrated circuits. Such growth with diversity makes for strong investment potential, but to separate out the best in the competitive mix of instrument manufacturers, the investor also needs columns-in this case the kind consisting of numbers. The company's spare cash has gone into a stock repurchase program In analysis by the numbers, Dionex is a winner. After 17 consecutive years of record sales and earnings, DNEX is again projecting double-digit year-over-year sales gains. DNEX has long been the market leader in ion chromatography, and now it has become a major player in high-performance liquid-chromatography systems as well. Building on a reputation for top-quality products and service, Dionex's pattern has been to expand through alliance rather than acquisition. The firm is committed to staying at the technological frontier, and it funds an ambitious R&D program and aggressive patent protection, the result being a continuing stream of products for new markets. Overseas sales-now over 60% of the total-have been growing fastest. Dionex's penchant for purity extends to its balance sheet. With virtually no long-term debt, DNEX uses its abundant flow of cash as a solvent for any obstacles to development. Competition is stiff and international growth is being tempered by a strong dollar, but sales gains, coupled with disciplined expense-side management, have kept DNEX's net margins trending upward. Few high-tech companies can point to the consistent, all-but-predictable stock price rise that Dionex has seen. The company's spare cash has gone into a stock repurchase program that has been injecting extra per-share zip into more gradual earnings gains. With few shares in circulation and little following on Wall St., volume is low. Our analysis? Buy at prices below 50." Southern Energy Homes Ripples In The Wave provides the following stock idea. An annual subscription is $157 for 17 issues and you can contact them at 352-378-8008. Southern Energy Homes (SEHI 9 3/4) is a recent selection from their newsletter. Below is the write up. "Southern Energy Homes is a vertically integrated manufactured housing company. They operate ten manufacturing facilities which produce manufactured housing under six brand names. They sell these homes through six company owned retail centers and through a network of independent dealers at 859 locations in 30 states. The company also offers transportation services to move these homes to their final site an has a finance division which provides consumers the means to purchase the homes. The company also owns four supply divisions producing wall panels, windows, doors and countertops, wood molding and trim finishing and kitchen and dining room furniture. These supply divisions generate about half of their annual sales to third parties. Manufactured housing accounts for about one in every three new homes sold in this country due to a cost of less than half per square foot than a typical site built home. (Excluding the cost of the land.) This puts home ownership within reach of more people, especially when the economy is growing. The market cap for this company is around $150 million versus revenue over $300 million Southern Energy has enjoyed an above average growth rate in the industry and has maintained one of the highest operating profit margins of the public companies in this group. The company has also strengthened its financial position in recent years with a rise in stockholder equity of 35% last year. The market cap for this company is around $150 million versus revenue over $300 million for an attractive price-to-sales ratio of 1:2 while earnings of $0.87 in the past four quarters places the P.E. ratio near 11, which is a substantial discount to its historical and projected growth rate. Book value near $5.00 per share places the stock at roughly twice book value. The company has repurchased 485,000 shares of its stock in the past few months at an average price of just under $10 per share. Insiders are neither buyers nor sellers of shares in the past 18 months, but they own nearly a third of the company collectively." | ||||||||||||
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