SWT are making a profit on each customer, it is the fact that in...

SWT are making a profit on each customer, it is the fact that in the last 6 months they have had to build a nation wide network that was costly. Its in place, and now they get the return on the investement. Investment first, profit later.

The first posters discussion of a margin squeeze - I don't see it too much. The wholesale price has come down, so if anything a margin squeeze to telstra and any new players who have to try and entice newcomers from the established players, like SWT.

The thing about ADSL is once the customers are there in place, they are reluctant to switch. I have ADSL through IIN, its always on, the bills are direct debit, I cant be bothered going through all the problems of switching unless their is a problem, which their isn't. So during the explosive growth of ADSL, it is important now to get the customers signed on, fixed in place, then the revenue comes in and the profits.

Customers already signed on are VALUABLE. Just look what DFT has paid recentlyt to aquire customers by buying out small ISP's. They paid $6 million for a small mostly dial up loss making company. IIN also buying customers through takeovers. SWT has built the customers itself much more cheaply. SWT will have 50 000 ADSL customers or more by JUne, nationwide. These will be very valuable to other players as well. If the company is not revalued up to around $30 million by then, it will most likely be a takeover target. IF IIN, which is worth $210 million, want to increase their ADSL customer base by about 40%, they only have to pay 14% of company value. LEt alone Optus etc.

So the critical thing is to lock in customers now when they are first signing up to ADSL, and SWT are doing this. Setting up the AUS wide presence has cost them money of course. Its an investment.

On monday? I would not be surprised, judging by the market tone if the shares drop a little at first. But the companie's customers, its growth strategy which has worked so well, its network and infrastraucture is worth more than the measly $18 million it is now. The last placement at 11.5 was fully subscribed in 2 days by institutional investors. So they know this is true. But does the average amateur trader? Long term valuation of SWT, at least 20 cents by june is my prediction ( which I have also heard from other sources outside HC)