PNWIF is in break out mode today. After a long period of silence, the company has knocked the cover off the ball today with big news.
According to a mid day press release, PNWIF has been awarded the contract to provide the online interface for all of Costco US’s (NASDAQ: COST) online photofinishing needs.
While on the surface this represents great news, there is even a stronger underlying theme here not covered in the press release.
This new contract represents Costco’s change over from Snapfish, owned by Hewlett Packard (NYSE: HP).
Hewlett Packard acquired Snapfish several years ago to get the company into the online photofinishing business. Snapfish came over with a number of large clients.
Today’s announcement represents a Costco defection over from HP to tiny, Canadian based PNWIF, a major coup. Other major HP customers could be close behind.
Here’s today’s chart:
As you can see, the stock has broken a downtrend line from last Spring’s $5 peak, and at some point should now go on to make a new high.
There could be more business like this for PNWIF around the corner. Also, with the stock solidly over $4, look for a jump to the NASDAQ SC from the Bulletin Board. There’s probably your next step.
If you are wondering, I wouldn’t jump in and buy the stock right now. Give it a day or two to cool off. I have been saying this could be a $10 number. Stand by.
Comments and questions are welcome.
Almost back to where to stock was pre-costco news announcement. I just cant figure it out, I would think the stock would of held in the low to mid 4′s
Editor: Quite so- I believe it is a market situation. If you have followed the story, you know they did a $15 million financing at $3.40- some of those guys are getting pounded in other situations and need liquidity. I’m sure that’s where the selling pressure is coming from.
a burd is saying that there may be a second” big box” store added to Photo Channel inventory.
Editor: I believe I stated the Costco deal “could” be the first in what will hopefully become a transition from HP to tiny PNWIF- let’s see if there are more.
Any idea when PNWIF will actually take over the Costco USA business?
Editor: I believe it is in early March. I also believe they have started migrating the image storage over the PNWIF now.
What’s up with PNWIF? Are they tanking because they are reporting late?
Editor: They aren’t reporting late. Under Canadian Regs, they have until the end of January, which I believe is absurd. The stock is tanking because of SFLY getting into a price war with Razorfish over 4×6 prints, thereby reducing margins. This doesn’t effect PNWIF, as they get the same amount per print, no matter how much the consumer pays. Nevertheless, a little bit of the luster has come off the sector for the moment.
It’s good to read in the PR below that the recent price competition for 4×6 prints may increase PNWIF revenue. I like their business model.
Have you heard any more on Photochannel and Kodak partnering or how they are integrating Pixology?
After hopefully winning more clients (Sams Club, Walgreens, Walmart?) I’d think PNWIF would be a tempting addition to Kodak. Didn’t HP acquire Snapfish just after Snapfish got the Costco accunt?
Thanks for alerting me to PNWIF, it promises to be my best bet yet.
VANCOUVER, BRITISH COLUMBIA, Jan 4, 2008 (Marketwire via COMTEX) — PhotoChannel Networks Inc. (TSX VENTURE:PN)(OTCBB:PNWIF) (“PhotoChannel”) the leading innovator in Online Digital Media Solutions for retailers advises that recent industry price cuts to 4 x 6 prints being offered to consumers by certain online retailers are expected to have little or no impact on PhotoChannel’s business and results of operations.
“We do not anticipate any negative impact by this industry move and could in fact benefit from it,” says Robert Chisholm, Chief Financial Officer of PhotoChannel. “Our business model is not dependent upon the consumer’s price of a 4 X 6 print. In the past reductions in pricing by our retail channel partners has led to increased print volume and revenue for PhotoChannel.”
Editor: I don’t believe we are going to have much of a handle on the financial condition of this company and the integration of Pixology until we get year end numbers. If they were US based, we would have them now. As a Canadian company, we have to wait until the end of January to get our first look at the company with Pixology integrated.
This stock is getting dangerously close to your suggested stock loss. Are you considering revising your recommendation based upon all of the market pressures that attacking the photo industry as of late. Any word on the other aspects of Photochannels offerings ie; dvd, software ect?
Editor: My outlook for the company hasn’t changed. However, using the SSL is a personal choice. SFLY has been taken out to the woodshed and beaten to death as a result of price wars on 4×6 prints with HP. This war doesn’t effect PNWIF as they get a few cents for every print regardless of the cost to the consumer. However, it does taint the entire small group. I expect Costco to be implemented and start by March, which will cause a huge burst in their numbers. I expect year end numbers to come out by the end of the month, and have no idea how the company will look financially with the acquisition. If you are concerned with preservation of capital, you have to use some discipline. Sell at my SSL, or choose your own. If you are long term, I am quite certain the company will be much bigger in one year than it is today.
Any word on business outside of the photo opportunities?
Editor: They have made some noise in the past about getting into the digital music world with their platform, but I haven’t heard anything about it in a long time.
Any news on a financial report?
Editor: They have to file their year end numbers at any moment. However, this is already very old news. It’s end of September. The biggest story now- how long before they fully convert Costco and begin servicing their customers, and can they steal more big clients from HP. We’ll see- been pretty quiet for quite some time.
pnwif wins sams club..comments on the year end financials and future of this co.
Editor: I’ll write a new BLOG on this later today.