Daily Trouble |
5\08 Daily Double
|
Related Items |
|
Friday, May 8, 1998
C-Phone Corp.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CFON)") else Response.Write("(Nasdaq: CFON)") end if %>
Website: http://www.cphone.com
Phone: 1-888-CPHONE-1
Price (5/7/98): $2 3/4
HOW DID IT FIND TROUBLE?
C-Phone pop. C-Phone drop. See investors stop to prop the stock up, up, up. (With sincere apologies to Dr. Seuss.)
Shares of video teleconferencing specialist C-Phone have been chopped down over the last few months. The problems are not completely C-Phone specific. The entire video communication market has been a grainy image lately. From the high-end commercial side with PictureTel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PCTL)") else Response.Write("(Nasdaq: PCTL)") end if %> to the low-end consumer market with 8x8 <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGHT)") else Response.Write("(Nasdaq: EGHT)") end if %>, the fallen players are plenty. However, C-Phone's swan dive has been much more dramatic -- in part due to the upstart nature of the company relative to its higher grossing peers.
BUSINESS DESCRIPTION
North Carolina's C-Phone markets video communication products. Using a computer or television monitor, the company's products utilize everything from ISDN to standard analog and digital telephone lines to transmit voice and video between users with compatible C-Phone equipment.
FINANCIAL FACTS
Income Statement
12-month sales: $1.7 million
12-month income: ($5.4 million)
12-month EPS: ($1.08)
Profit Margin: N/A
Market Cap: $14.6 million
Balance Sheet
Cash: $1.4 million
Current Assets: $3.5 million
Current Liabilities: $1.0 million
Long-term Debt: None
Ratios
Price-to-earnings: N/A
Price-to-sales: 8.6
HOW COULD YOU HAVE SEEN IT COMING?
If only press releases could have a material impact on the bottom line. Over the past few months, C-Phone has been stringing along some beauties. Selling through Sprint was a major coup. Why wouldn't a long-distance carrier want to nurture a product that would mean more minutes billed? Contracts were won to supply the military and the U.S. Post Office with video conferencing equipment. Excellent. That has to be a whole lot of money servicing a whole lot of people, right?
Not quite. While sales should continue to rise, they are still too insignificant in light of the competition -- and certainly too far away from any meaningful profitability. That is why one has to wonder how the stock got bid up to a market cap just shy of $100 million last year when total sales would eventually come in at around just $2 million for the year ahead.
For an unproven company in an unproven sector, the sky had to fall -- it didn't belong there in the first place.
WHERE TO FROM HERE?
Since C-Phone is trying to push C-Phone Home as the ultimate consumer gadget, let's stack it up to 8x8's ViaTv. Just this past week I saw some pretty serious shelf space devoted to ViaTv at my local Best Buy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %>. If I want a C-Phone device, I have to go to a Sprint store or have the right mail order catalog wind up on my doorstep. Oh, and, well, ViaTv is also considerably cheaper.
So if investors choose to see 8x8 as a troubled company given its recently demoted share price, what must they think of C-Phone? 8x8 is cash-rich, making money, projected to grow earnings, and had trailing sales 25 times greater than C-Phone.
Meanwhile, in December, faced with an eventual cash crunch, C-Phone had to resort to a private placement to increase its working capital. There was no press release that time (just the mandatory S-3 filing with the SEC).
Maybe it's best not to let this Cat in the Hat inside until it shows some credentials -- sage yet often unheeded advice from the fishbowl.
-Rick Aristotle Munarriz
([email protected])
Check out the Daily Trouble Message Board!
|
|||||||||
<% if request.querystring("source") = "yhoolnk" then referer = Request.ServerVariables("HTTP_REFERER") if referer = "" then referer = "http://finance.yahoo.com/" response.write " " end if %> <% function YahooWelcome if gsCookieUsername = "" and request.querystring("source") = "yhoolnk" then %> |
Welcome, Fool! |
|
Be a Fool and get free, unlimited access to our site.
What we offer: |
© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us |