PNWIF: Comments From Analyst
June 4, 2008 @ 1:42 pm
Analyst Eric Wold of Merriman was out with some comments on the recent quarterly financial filing from PhotoChannel. Here is a brief version of today’s commentary:
“PhotoChannel: COST launches on PhotoChannel; confident in Sept quarter profitability - Merriman (4.00 -) : Merriman notes COST launched on PhotoChannel Network’s solution — after a few months of delays and last-minute push-outs caused by issues that Snapfish encountered with transferring customer data and digital photos over to PhotoChannel. Given the start-up launch expenses already incurred during both 2Q08 and 3Q08 in anticipation of the Sam’s Club and Costco launches, firm believes that most of the one-time expenses will be behind PhotoChannel before the start of 4Q08. Coupled with an estimated $2mln+ in transactional revs to be generated during 4Q08 at 90%-plus gross margins, firm is increasingly confident in PhotoChannel reaching profitability during 4Q08.”
He is saying he believes PhotoChannel can return to profitability in Q4′08- to PNWIF, Q4 of ‘08 is July to September. He is banking on the Costco business to deliver $2 million in transactions at 90% margins during the quarter.
Then, we head into their first fiscal quarter, which is our Q4, and generally a blockbuster for the company.
It would appear from his comments that he believes the Costco service has already started. I don’t believe that’s the case, but I do believe it could be any minute now.
One positive from my point of view- PNWIF took all the costs associated with the build out of the infrastructure as immediate expenses. While this makes the losses look deep in the short run, it improves financial performance longer term as there won’t be amortization expenses down the road. When the revs flow in, the profits won’t be hurt by as many non cash expenses.
In the meantime, the stock seems to be pegged at the $4 plus a couple of cents level- it’s staying in shape for a possible NASDAQ listing. It might be a good idea to be in before the NASDAQ listing materializes, if it does.
Comments and questions are welcome.
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I am very excited for next quarter. Did you listen to the CC? new ceo-possible 25,000 stores in asia , small acquisition
Editor: I have not yet. I tried to listen to the replay yesterday, but it wasn’t available yet. Will try later today.
Comment by tom — 8/28/2008 @ 8:13 am
earnings and CC tomr -any comments before hand
Editor: Just the fact that they are attending a conference and doing a conference call suggests there will be an improvement in the numbers. However, that quarter won’t include much data on Costco US, so unless they are prepared to give some detail on how that’s going, it won’t be enough information. We’ll see. I don’t see anyway this can be anything but a positive.
Comment by tom — 8/25/2008 @ 7:24 am
The stock has dropped to $3.20, do you think it is a buy at this level?
Editor: I have cut my personal position in this stock down to 10,000 shares as I have been very disappointed in the company’s seemingly lack of effort to get its story out to the markets. As far as I know, they aren’t attending any conferences, and don’t seem to have much interest in getting the word out. On the other hand, this company’s numbers should really accelerate in the latter part of this year with all the new alliances. Our Q4, which is their Q1, is going to be really strong. The short answer- yes. I think it’s certainly more of buy than a sell right now.
Comment by Daniel Shaub — 8/6/2008 @ 1:23 pm
back down to this 3.4 range..any comments on pnwif
Editor: I personally have taken my position down to 10k shares. I am disappointed the company simply never says anything about the state of their business. However, a quarter or two out as the market starts to see numbers come out of their Costco relationship, I think this thing is going a lot higher. Being under $4 is a big negative- it’s not going to get on NASDAQ like this. At any rate, if you’re long term, I believe it’s a great buy. Short term, I don’t know of any catalysts that are going to get this stock moving.
Comment by tom — 7/21/2008 @ 8:44 am
Any insight on the problems with the Costco US site? It seems there are issues with the launch as the full product line is not available yet and the launch was delayed multiple times.
Editor: it is my understanding the launch has gone well, and business is robust from Costco. I’ll call someone and confirm later today or tomorrow. If there are bugs, I’m sure they are working on them.
Comment by Anonymous — 7/1/2008 @ 1:42 pm
bottom line is these people like fitzgerald and the rest of the directors are playing games with this stock as they run it up to $4.00 and then back down and how many times have they done this in the last 2years they don’t want NASDAQ then they can not play games, tell it like it is.
Editor: That statement is pretty funny. I agree, Fitzgerald is a problem at this company. However, not the way you think. Fitzgerald is a bit of an absentee CEO who simply doesn’t understand the importance of an aggressive effort to get your word out to the financial community. He hangs out in England and Australia and basically has zero interest in telling the story to fund managers and attending conferences. If they would get out, the stock would be $6 today. It will get there anyways, but much more slowly than it could. I doubt very much that Fitzgerald even knows the stock is below $4 again. There’s your real problem.
Comment by mike — 6/17/2008 @ 5:01 am
so let me get this right last week it was going to stay above 4.00 and get a nasdag listing and now its filling gaps do you read read what you write?
Editor: I’m only reporting on how the stock is behaving. I believe this stock needs to stay at $4 or better to keep the NASDAQ listing requirement in place. Right now, they probably wouldn’t get it unless they got some kind of variance. Hope to see it trade back over $4 rather quickly, but I don’t control it.
Comment by Anonymous — 6/13/2008 @ 4:29 pm
What gap is this trying to fill? I haven’t been keeping up on this one.
Editor: Someone appears to have a lot for sale. Yes- this is going to come back and fill the gap. $3.40 would be the idea level to buy the stock.
Comment by JD — 6/11/2008 @ 6:58 am