Special News Flash- Just got this 411 directly from the company at 11:25 Pacific: PHCHF will be trading tomorrow under a new symbol on the US Bulletin Board- the new symbols are as follows: PNWIF on the US bulletin board, and PN on the TSX- effective tomorrow morning.
The PhotoChannel reverse split did not go as planned today- it was FUBAR- an acronym widely used in military circles- it stands for (decorum prevents me from using the full words) Fu**ed Up Beyond All Recognition.
The stock opened for trading in Canada today under new symbol PN, but was halted for trading shortly thereafter when the powers at be learned the stock was not trading post reverse split on the US Bulletin Board. It continues to trade pre reverse split in the US.
In the meantime, PhotoChannel issued a press release pre open this AM which gives investors a glimpse into the health of the company, which is better than it has ever been in the 10 year history.
The company disclosed that over the summer months their business virtually tripled over where they were during the summer months of the previous year.
In addition, they noted the $2 million they currently have in the bank was sufficient capital to prevent them from going to the capital markets for additional financings. Add this to the mix- we are entering the seasonally strongest period of the year for Photofinishing, and 5,000 CVS location are now hooked up and functional. Upload your images to the web site- stop by your local pharmacy in one hour and pick up your prints.
On this news the stock is trading very well stateside- here’s a chart:
As you can see, the stock was trying for a new multi year high today, but has since backed off a bit.
I would not be a buyer today- I would wait and see what happens after this mess is sorted out. We’ll have another look tomorrow post reverse split in both markets. I wouldn’t be surprised to see today’s gains hold post reverse and set us up for a new multi year high.
Comments and questions are welcome.
I like the story you have told on this company, but I’m just wondering about something. Have you actually ever tried their product? Have you tried to upload 100 pictures or more for development? I have, and it’s extremely SLOW! This is my only worry about this service. As long as absolutely all residential Internet connections are strangled for upload speed, it is often faster to pop down to your local Black’s or pharmacy and upload your pictures using their terminals rather than doing it online. I tried it once, and I will never try it again, and my friends are telling me the same thing. Is this company a step ahead of the technology curve?
Editor: Yes, I have tried several services. I didn’t have a similar experience. However, I did upload about the same number of pictures and just stepped away from the computer for a while as it was running. I’m not saying this is the only way people are going to get their digital images printed- there will be a lot of preferences. However, there is one thing that you can’t argue with- as disclosed yesterday their revenues have tripled year over year, and stores are adopting this service. Two years ago bandwidth was not good enough for this service. It has gotten better, and will be even better two years from now. The trend is positive here, but it’s not the only choice at this point in time.
I have tried this service also and found it very quick and easy. The pictures were excellent quality and relatively inexpensive. They were waiting at the CVS store when I got their.
Editor: PNWIF made about $.02 for every print you ordered, and they didn’t have the cost of customer acquisition. As more stores get added, and those stores advertise the service more vigorously, those numbers will continue to improve. That’s why I love their business model vs a Shutterfly- recurring revenues which will keep growing, but no cost of customer acquisition- this equates to huge margins. Think a year down the road- more store chains are coming.
This will take fire once they announce the Walmart China deal.
Editor: Walmart China?- I cannot confirm or deny this is in the pipeline. I don’t know and haven’t heard anything about it. If it were to happen, fire would be a good word to describe how the stock should behave.
I tried to buy this stock today with Schwab. Because of the settlement structure it can’t be bought online, only throught their foreign office with a $35 fee. Have any other readers had this problem with their brokers?
Editor: Perhaps you were trying to buy it through its Canadian symbol: PN- then that would make sense. However, you should be able to easily trade the stock online just like any other BB stock under the symbol PNWIF- I have done it many times at my online brokerage firm. Let me know if that is the case. If you are trying to trade it under PNWIF, and Schwab is pulling that, it is just an excessive fee for nothing.
I have tried their service and have noticed the long upload time. I did the same as the editor – I just stepped away from the computer while it did its thing. I also ordered a gift item recently and that went very well. I ordered a cup with my kids picture on it and hand it sent to my mother. The cup arrived fine and in a timely manner. My mother was very happy with it and told me the picture was just as sharp as the original print I had sent her. Question: Who fullfills the gift items – such as a photo mug? I went through the CVS site so I assume CVS does? Is there a central location? One more thing … Is’nt PhotoChannel due to report its 4th quarter earnings?
Editor: Firstly-on the actual products. The products, whether they be prints, mugs, albums, etc are produced by the store who’s web site you went to. PhotoChannel simply provides the web site and servers associated with uploading your images and placing your orders. In return for providing the service, the store pays PHCHF a small percentage of your order- it’s about $.02 per print. I love this model for the following reason- PHCHF is just a bunch of robust servers and designers. They don’t have the massive costs associated with having the store, carrying the inventory, and acquiring the customers. Therefore, when we see the financials, the margins will be impressive. Since photoprocessing is a big profit center for stores, they are rapidly developing – the model of ordering online, but going in the store is the most convenient and best for the store as it gets their customer in the door. They don’t want mail order, and uploading in the store requires two trips, which is inconvenient. As they add more retailers, and the retailers get more agressive with their ad campaigns, numbers will just continue increasing. On the financials- I know they hope to be able to disclose them by the end of the year. However, since they are Canadian, they have until the end of January. I know it won’t be past early January. They are close to finishing their audit now. If they were profitable in the 4th quarter, I would expect this stock to make its next leg up. I still like it for $4.
Good news today about the options. I did not hink so at first but am I right think that? What it tells me is that the company people will have the option to be owners in the company. The option price is $2.32 which give me guidance that the company believes that this is a discount to the market. Plus, it means that roughly $1.4 million is going to the company when those options are snapped up. Am I correct?
Editor: And, thanks to the new and kind of Draconian treatment of options, there will be an expense on the income statement as well. However, it simply says these folks don’t make anything on their stock unless it goes higher. Bullish sign from management. Far more interesting is the next BLOG, which I did on Friday night.
Buried in the news of the placement today was an “acceleration” clause for the warrants if the stock goes above $6 U.S. How does the market interprete that?
Editor: I am not in love with this event. It’s not the price of the funding, it’s the warrant they attached to it. If the funds that participated simply break even, they can keep the warrant for their upside. Your downside now is $3.40 in this stock. So far, the market hasn’t chosen to take this too negatively.