Hedge Fund Manager Aaron Edelheit Loves Photochannel (PNWIF)
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Photochannel (OTCBB: PNWIF) is a way for consumers to order photos online from stores like Costco (Nasdaq: COST) and Walmart (NYSE: WMT).
-Edelheit thinks people are going to transition to uploading photos online and as that happens Photochannel will also grow.
-Home printing lost 12% of its market share.
-Digital prints were up 27% in 2007, digital prints ordered online grew 64%.
-Some of Photochannel's new clients include Costco, Sam's Club and Kodak China.
Edelheit believes Photochannel is trading at a tremendous discount and is an incredible investment with great growth ahead of it. I'd stay tuned and keep Photochannel on your list of small-cap stocks to look at over the next couple of months.
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Comments
Photochannel
Photochannel is cash flow positive. They are in no danger of running out of cash!
Photochannel
John, your "benchmark" Shutterfly is a poor comparison, seeing that Photochannel has been acquiring all of Shutterfly's corporate clients.
Photochannel
What nonsense: 1. Retailers get the lion's share of the margin, so revenue for them may increase but they;re still losing money. 2. Speaking of losing money - they'll be running out of cash soon, at this rate. Will investors be prepared to give them yet more money? Is that priced in? 3. Check out the "benchmark" called Shutterfly - how is their stock been doing?
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Answer
John on Oct 9, 2008 03:26 PMDave/ Steve, Shutterfly are primarily B2C so they're not competing for corporate clients. Photochannel has not taken a single corporate client from Shutterfly for that matter. Where they are similar is that they provide essentially the same service: Shutterfly directly to consumers and Photochannel through retail clients. However, the clients capture most of the margin, so the more interesting performance metrics are growth in gross profit and operating profit (or big loss in Photochannel's case...) rather than revenue growth, and on that measure performance is less than great. Speaking of corporate clients - they've been losing them in Europe. As to cash - I am not sure that they're consistently cashflow positive - why has the cash balance come down over the last 12 months? With these levels of losses, how can you be so sure that they won't need more cash? If they do, investors will take a massive haircut