After further reflection, I think the cap raise was critical for the company's survival.... think of it as a kind of bail out. If we cast our minds back to the initial float, emerging markets were their primary focus and the first world markets were something they would tackle at a later date when the company had grown. I don't think that they are earning anywhere near as much revenue as they had initially projected from TATA and the SEA Freeway market, this is reflected in the Q1 earnings report. Even if you do some simple maths you can see that this kind of revenue has to reach many multiples to become significant enough to justify the market cap. Potential alone cannot hold it up because the potential can be seen in real time with the uptake rate. The download figures are not showing a viral uptake, to be in the millions of user range it will take years, and at this pace I would predict earnings to just trickle in for the next 1 - 2 years at least. Just because you have access to a multi billion user market does not mean they will download your product, uptake is everything.
They NEED the US freeway market and OTT to justify their existence. They must get iOS up and running and they must start generating revenue from OTT services asap, or they will run out of cash very quickly. However, they are now at the mercy of the Carriers project time lines, who without a doubt do not give a stuff about Syntonic's cash burn rate. It's a case of keep up or get left in the dust.
I sincerely hope that SYT do not miss the boat with the US market and they nail it down very quickly. Investors eyes should be laser focused on the events that evolve in the US over the next few months. Because without the addition of the US market SYT is far from a growth company.
Judging from their tone during the webinar I see iOS in the app store by xmas at the earliest and OTT is still to early tell. BTW I made statements back in October along the lines of; iOS would not be launched until the end of the year and was slammed for going to extremes.
I have no doubt that it will head back down to the CR or at least the CR + discount rate = 3.6 ish.
iOS launch and a more carrier deals may see it rise up in the ST and I am sure at that point the Sophs will take advantage to distribute.
SYT Price at posting:
3.8¢ Sentiment: Hold Disclosure: Held
