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Message: RE: The Fact is...B-Lunist/RyanAi...

RE: The Fact is...B-Lunist/RyanAi...

posted on Jan 28, 2005 07:38PM
I hear what you`re saying re: gambling at 30,000, but I do have an issue with you`re insistence that all else would be abandoned if gambling were doable, and that EDIG/digE would be out of the mix. I may be totally wrong, but it seems to me that not everyone will want to gamble (e.g., I consider myself a gamblin` man - heck, I`m invested in EDIG! - but I live less than a mile from an Indian Casino, and haven`t gambled there in some 5-6 years; but I do watch TV/movies for hours a day). Sooo, to maintain maximum flexibility, what if an effective gambling program could be installed in the digE IN ADDITION TO current content? Funny how this is how I ``took it`` when O`Leary first mentioned it (even giving the impression that such a thing had been tried or at least theorized). Best of both worlds...gambling for the gamblers, other content for others not so inclined, all in one device. Isn`t this a possibility? And wouldn`t EDIG benefit? (and I`m not talking gambling revenue sharing, just digE sales).

As for O`Leary`s comments that IFE isn`t up to ``expectations`` (or whatever his exact words were); we may be getting upset over nothing. Who knows what he meant? Maybe he was expecting a significant usage rate improvement over time, over the 30% experienced early on. Maybe the usage rate has dropped from 30% to a mere 25%? (or less, which could be easily explained if content isn`t being timely changed out/updated - as appears to be the case). I seriously doubt usage rates have dropped to a point where the digE isn`t profitable (since it reportedly only takes 3%).

Now for my wild ass speculation: O`Leary seems to be a bit of a ``wild-eyed pistol-waver`` type who likes it on the edge, but with good business savvy to back it up. He`s bought 1,000 digEs and wants 5,000 more (minimum). He has his beedy eyes on EDIG, and notices that with a couple of his comments early on, the stock reacts significantly. He thinks ``how do I finance the additional units?``. He knows that announcement of an order for the additional 5,000 will be well received, and would equate to $3M in revenue to EDIG, and about $750,000 of profit. He, like we, could easily figure this out. What would happen to our PPS if that order were announced, and by he himself coupled with glowing words touting the success of the device? Could it take us to our (current) annual high of .56? So why not coordinate a strategic buy of 8,000,000 shares (less than 5% of outstanding shares) at an average price of .28? Then let things happen as previously planned, buy the 5,000, announce it, but then watch the EDIG PPS react and sell for a doubler at .56. He nets $2,240,000 (albeit before taxes), which would fund 3/4 of his order. Hold out for an even higher exit point, fully fund the order and cover taxes to boot! Even using fundamentals and based purely on his order, 3M/165M = .018/share; multiply by a ``within reason`` P/E ratio of 50 and you get a PPS of ~.91/share. Even with a P/E ratio of 30, you get .545/share (sans emotional factor and traders stepping in). Would it be legal? Arms` length away, and I have little doubt that this sort of thing is not out of the ordinary.

Okay, I`m dreamin` so I guess I should put away the pipe now, but this scenario does make sense to me (except the legal aspect; don`t know that the arms` length is quite far enough away).

And, as always (dammit!), I KNOW nuttin`!

SGE

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