To summarize...People Telecom said that when they merge with SWT, they will have revenue in excess of $110 million for 2004-2005.
Its pretty hard to see that as the combined revenue for the first six months of this year was around $35 million from memory.
So on the forum Colin Marland has been asked a few times whether this figure is over optimistic. Each time he has said it is not. The last time with a in depth lesson on the differences between selling apples and telecommunications services. Proof that he thinks the average investor pretty stupid in my opinion. GIven the earnings trend to date, (as elaborated by Grant62) - $110 million definately seems unrealistic so needs some supporting eveidence other than a lecture on apples and oranges and reassurances from a director who has a vested interest.
Also interesting that his answer to the question that implied that People Telecom might be exaggerating their forecasts so that the directors get a bigger share of the pie was "immature". Surely, anyone who has been investing for more than a short time has seen directors fleece shareholders in some way.
I continue to hold even though I don't believe him. I believe they may be exaqgerating their $110 million figure. He said they will be providing evidence based on monthly figures soon. I think an average between what he says and our own expected figures (approx $75 million) to give around $85 million revenue on 2004/2005 is more realistic.
Thats still makes SWT at current prices very cheap in my opinion. I would not hold otherwsie as I after that discussion i don't hold SWTfor goodwill.
Bring on the merged entity, People Telecom is undervalued at $70 million which is roughly current price trading as SWT at 12 cents..
From forum
Extralite: Greatful to Colin for his answers.
I think the question every shareholder would want to know is this
How does the company expect to generate revenues in excess of $110 million for 2004-2005 given the performance at present.
For the first 6 months of this financial year, People Telecom generated 26.6 million and SWT of 5.8. So if we double it and add a bit for growth we get around 70 million for the year.
Its a stretch to go to $110 million for next year.
I am happy with with the merger just on $70 milllion for revenue as I think People Telcom bring a more rounded business to SWT and will still be undervalued.
I remain a shareholder even though I am very skeptical on this $110 millon figure. I would like to think that putting this target on public record would mean that Colin Marland's reputation was at stake but im not that naive.
If Colin Marland does answer again, I think a lot of people would like to see exactly how this figure was arrived at, rather than being plucked from thin air to inflate the PTL share of the merged company, and as a large shareholder, his own pocket.
Thanks again though to Colin for answering the questions to date. --------------------------------------------------------------------------------
Extra lite,
Answers as follows
1.First you need to understand the nature of an 'Annuity buisness', If you had a deli and sold apples, you continually need to find customers to sell more apples to (ie no guarentee of recurring sales), In the Telecommunication buisness once a customer is secured you continue to bill the month after month , for instance say you billed 5 Mill in February , sold 500k of new monthly revenue and had net churn of 2% (100k), then in March you would bill 5.4 Mill (you must also allow for actual buisness day's ie seasonality) then March figures would represent annualised revenue of $64.8 mill, and so on , the key numbers to be focussed upon are not the last half or year but the closing month of the period, this information should be contained in the documentation to be provided which will form the official figure's.
2.The company is composed of a number of directors and the figures to market represent the collective opinion of the company not one individual and will contained in the documentation to shareholders (and option holders)
3.This last comment reflect's a fairly immature view of the transaction and as such will not be commented upon
