Thursday, January 15, 2009
Reader Norman L. asks via e-mail about my thoughts on this week's release by another Edelheit pick, PhotoChannel (OTCBB: PNWIF.OB). My first thought is that it would have been helpful if the company broke out its Q4 results, so we could see if management's (and Edelheit's) prediction that Q4 would be EBITDA-positive was correct (On the Value Investors Club, Edelheit estimated Q4 EBITDA of $0.10 to $0.12 per share.). On PhotoChannel's conference call, management reiterated its prediction of positive EBITDA in Q4 and positive EPS in Q1 2009 though.
Aside from that, my thoughts:
- 127% year-over-year increase in revenues is encouraging.
- 107% year-over-year increase in expenses wasn't encouraging, though my concern is ameliorated somewhat by a) most (~75%) of these being non-cash expenses; b) management's claims that much of the cash expenses represented start-up, non-ongoing, costs related to new clients.
- $3 million in cash and no debt is encouraging.
- Let's see how Q4 EBITDA compares with Edelheit's estimate, and let's see if the company does finally turn a profit in Q1.
The banner image above is from PhotoChannel's website.