To OTC Journal Members:
 

PhotoChannel Networks (OTC BB: PHCHF; TSX: PNI) - Shutterfly (NASDAQ: SFLY) IPO Imminent

I am informed that the aforementioned ShutterFly (NASDAQ: SFLY) should open for trading this Friday. It was aforementioned in this past weekend's intro edition on the reincarnated PhotoChannel. Shutterfly is raising about $80 million. Post financing the company will have a market value somewhere in the $350 million range depending on where the stock trades.

Here's the important issue you need to understand- if Shutterfly is a hot IPO, investors are going to be looking for other companies in the space- there is only one publicly traded- PHCHF (or PNI in Canada).

If you want to look at the Shutterfly profile, go to http://www.ipohome.com/common/ipoprofile.asp?ticker=SFLY - or just click here. The deal is supposed to be priced in the $13 to $15 range, and rumor has it the stock will trade at a nice premium to the IPO price.

Most importantly- Shutterfly is a mail order house only. They must advertise for customers, and have the fullfillment infrastructure in place. In the last year they made a $2 million profit on $90 million in sales.

I'll bet when we drill down, we will see that PHCHF has as much gross profit as Shutterfly, albeit on a much lower top line. The top line revenues flow directly to the store where you pick up your photos- PHCHF simply keeps a fee for facilitating the transaction.

Granted, the top line does not look as robust, but the bottom line per print will be equivalent. PHCHF, with it's $60 million market cap and 5,000 plus retail outlets looks cheap in comparison to the Shutterly and its $350 million market value.

Owning shares of PHCHF is almost an arbitrage trade on SFLY later this week. You are taking advantage of inefficiencies in the market to put profits in your pocket.

For PHCHF- upside target $.40 to $.50 this year. SSL- $.14. 
 

Correction From Original Presentation

Here's a quote from this past weekend's initial presentation on PHCHF:

"You can invest in Snapfish, but only if you buy shares of Hewlett Packard (NYSE: HP). HP bought the company several years ago. At the time of the purchase, Snapfish already had the WalMart relationship in place. According to industry scuttlebutt, WalMart is a bit unhappy with the relationship. Snapfish is very active in direct customer online printing and shipping services. This competes directly with WalMart's pick up service."

As it turns out, I was incorrect when I identified WalMart as being a bit unhappy with the HP/Snapfish relationship. In fact, the retailer who is rumored to be a bit unhappy with HP/Snapfish is Costco. Costco had the relationship in place with Snapfish prior to the HP buyout. Subsequently, PhotoChannel was awarded the Costco Canada business. One analyst believes this could be a harbinger of more to come. Many apologies for the mistake. It was not intentional.

PHCHF is the only pure play aside from Shutterfly in the online photofinishing space. The space is going to get hot. Own Photochannel now with an upside target of $.40 to $.50 this year, and an SSL of $.14.

If you want to read the original presentation from this past weekend, simply click here. I haven't included an updated chart since the stock has not moved much since Monday. The chart in original presentation is still current.

Get into PHCHF now, if for no other reason than owning the best value in this space. All of Wall Street will be looking at the space in short order.

Your feedback on this idea would be appreciated. If you like it, do you own it? If not, then why don't you like it? Email me at editor@otcjournal.com.

Subscribe

Information is power and timely information is profitable. Become informed and profit from OTC Journal Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the OTC Journal Email Newsletter on a regular basis.

To ensure newsletter delivery, you can add any additional email addresses you may have to the OTC Journal Member List. Receiving the OTC Journal Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the OTC Journal recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.

Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the OTC Journal, simply follow the instructions located at the bottom of every OTC Journal Newsletter Edition.

Go Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts. MarketByte LLC has been paid a fee of $30,000 by PhotoChannel for coverage of the company. In addition, MarketByte has purchased 500,000 free trading shares at a cost of $.1366 per share (recalculated from first edition). This should be viewed as a potential conflict of interest. The management of MarketByte reserves the right to buy and sell shares of PhotoChannel at its discretion.

All statements and expressions are the sole opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

From time to time MarketByte LLC sells shares in the open market it receives as compensation for coverage of client companies. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, the editors do not view the sale of the shares as contradictory to any advice delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.

The editor, members of the editor's family, and/or entities with which they are affiliated aside from MarketBtye LLC itself, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter. Some of the companies featured in the OTC Journal pay a cash ESP fee to an affiliated technology company ranging from $2,000 to $5,000 per month for internet related technology services.

The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $140,0000 in Dutchess Private Equities II LP (“the Dutchess Limited Partnership”), a limited partnership in which the MarketByte Pension Plan is a limited partner. The Trustee of the MarketByte LLC Defined Benefit and Trust (“the MarketByte Pension Plan”) has invested approximately $190,0000 in the Longview Fund (“the Longview Limited Partnership”), both limited partnerships in which the MarketByte Pension Plan is a limited partner. No one associated with the MarketByte Pension Plan has any knowledge, information, or control as to any past, present, or future investment activities of the Dutchess Limited Partnership or the Longview Fund.  The Dutchess Limited Partnership is one of two hedge funds managed by Dutchess Advisors.  Dutchess Advisors and Longview periodically refers companies to MarketByte LLC for possible coverage by one of the MarketByte LLC publications, which publications include The OTCJournal.com Newsletter.  Dutchess Advisors or Longview may or may not own shares in the companies that it so refers to MarketByte. MarketByte has no information (outside of information readily accessible to the general public such as SEC filings) as to whether Dutchess Advisors or Longview owns any shares in the companies that it refers to MarketByte LLC.  The above relationships should be viewed as a potential and/or actual conflict of interest by shareholders and prospective shareholders of MarketByte LLC client companies. 

The profiles, critiques, and other editorial content of the OTCjournal.com may contain statements that appear foward relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN  SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN  CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.govand/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm. Disclaimer ID:$subst('Recip.userid') Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.  MarketByte LLC's mailing address is 4653 Carmel Mtn Rd Suite 308 #402, San Diego, CA 92130.