Wednesday, December 3, 2008

PhotoChannel Update

Hat tip to reader N.L. for mentioning that are updates to the Q&A for PhotoChannel (OTC BB: PNWIF.OB) on the Value Investors Club site. Edelheit remains bullish on the Costco deal and estimates that PhotoChannel will end the year with $4 million in cash and no debt.

The image above is from PhotoChannel's Website.


Albert said...

I saw that today. Again every comment in every one of his posts reflects the more optimistic interpretation of current facts. It would be nice if once in a while he admitted some risks or downside. From the looks of it, at least one poster questioned whether the company might go out of business, but AE was very dismissive of the point, and claimed (somehow) that it was only because 600k shares had been dumped into the market. I'd love to know how he knows what is happening with all these shares.

I'll bet dollars to donuts that (1) the announcement PNWIF makes in December is FAR from the terrific news that AE predicts it will be -- though I'm sure he'll spin it appropriately positively; and (2) they won't start giving guidance re future earnings in the Dec call or announcement.

DaveinHackensack said...

Post-October, there have been plenty of currently profitable companies selling for low single-digit earnings multiples, so it's somewhat understandable that Edelheit picks such as PNWIF that are still posting losses have gotten crushed. A bigger concern for me than the stock prices is when these companies will start generating positive earnings. Destiny Media and PhotoChannel are, in theory at least, high-margin, low tangible asset businesses. Given that, a growth in revenues ought to lead to profits sooner rather than later.

The main reason I've been averaging down on Alloy Steel, but not my Edelheit stocks is that Alloy Steel is currently profitable (other reasons include its conservative strategy of using retained earnings and not debt to expand its plant and its history of not diluting shareholders). If PhotoChannel turns a profit in the next quarter or two, I'd consider adding to my position. Chances are, at that point it will still be trading at a significant discount to the price at which Edelheit recommended it.