what to do?, page-19

At the moment I'm not so worried about the share price . It was pretty inevitable after an under subscribed share offer and the understandable bad feeling about the stock on the part of holders.

For me I was holding prior to the raising, didn't participate and got dilluted to next to nothing and have recently topped up (at a price of about 5% of where I had originally bought in).

I am now more concerned around the health of the company and to me the major question now is - will it survive?
If the answer is yes then I think it is pretty clear that given the underlying earnings then the stock is hugely undervalued - if no then at any price it is over valued...

Things in favour of survival
(1) New CEO - everything I have read suggests he is the man for thejob and I like the actions he has taken so far - consolidating brands,cutting a bloated workforce. If he hadn't come in I would be out now and would not have even considered topping up.

(2) Photon has great brands and businesses. BMF is a stand out, Naked is a strong international brand and expanding, Frank PR recently won the PR contract for Football Australia...etc These businesses are making money and expanding.

(3) The horrendous holding company level situation the previous "management" left the company in -an example being bloated T&E budget throwing million dollar parties with our shareholdermoney - I feel that there is scope here for the new CEO to work with and improve efficiency(which is underway with the staff cuts and rationalisation) to produce quick benefits for a turn around.

Against
Debt, debt and more debt plus somemore deffered payouts...

The cap raising ensured survivial but in my view didn't sort the issue out (although I doubt they could have raised much more).

My view is that the company needs to stabilise over the next 6months or so. The CEO needs to live up to expectations and the businesses within Photon at least maintain current EBIT levels. This will help stopp the free fall and once they get the first tranche of debt repayments out the way things will look brighter.

Even then though debt will still be crippling and my view is that they will look to refinance or sell one of their businesses at more favourable terms

Anyway these are just my thoughts. Photon at this point is very risky but taking the emotion out of seeing my holding diluted so much I view the current price definitely compensating for that risk.

Would welcome the views of others...