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SNN #18 - December 03 Issue
- Subject: SNN #18 - December 03 Issue
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- Date: Wed, 8 Dec 1999 05:21:48 +0100 (MET)
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December 3, 1999
The company we are profiling today is SmartServ Online Inc.
(SSOL-NASD Bulletin Board).
This company came to our attention in November 1999, when
their share price vaulted from $5 to a high of $24 5/8. Refer
to chart at: http://www.bigcharts.com/quickchart/quickchart.asp?symb=SSOL&sid=0&osymb=SSOL&freq=1&time=6
The price has recently settled in the $17-18 range.
There is also a tradable warrant on the stock. It has a
convoluted conversion price due to a prior rollback of the
company's shares. It takes 2.32 warrants and $9.28 to buy a
share of common stock and the warrant has been trading
between $3 and $4.00 this week. There are 1,049,981 warrants
outstanding as of 11/22/99, convertible into 456,296 common
shares. This would provide additional working capital of
approximately $4.2 million to the company.
We like this company for a number of reasons:
1. Smartserv's business is providing online information
and transactional services to strategic partners through
screen-based telephones, the Internet, paging devices and
other communications systems such as PDA's. This has become
one of the hottest sectors of the stock market as Nokia
and the other telecom equipment manufacturers begin to
deliver their new generation of WAP phones. Demand for
these new units has been exceptionally high, which in turn
will lead to demand for the full range of services, which
these devices are capable of providing. Figures as high as
300 million such devices being in use worldwide, within
the next 3 years, have been quoted. For an Investors Guide
to SmartServ refer to sites at:
2. As of November 22, 1999 there were only 1,435,336 shares
issued and outstanding. Corporate Insiders and 2 other
entities own 35% of these shares (We would assume this is
to maintain a "control" position, in friendly hands, and
these shares are unlikely to be sold.) This means the "float"
is approximately 900,000 shares, which is extremely small
for a company with such potential. The market cap is only
$25 million, while companies such as Aether Systems
(AETH-NASDAQ) have a market cap of $1.75 billion. Much of
this difference in market cap has been attributed to AETH
trading on NASDAQ.
3. The company stated at the recent COMDEX show in Las Vegas
that they have made application to have their shares traded
on NASDAQ, and they expects to be listed and trading there
within the next 90 days. Given the interest the market has
shown to date, a NASDAQ listing should have an impact on
institutional and investor awareness of SmartServ, and as
a result, the share price. Prices between $50 and $100 have
been speculated about on the various chat groups. For a
discussion of comparibles refer to:
4. The company has stated that they expect to announce
contracts for the use of their wireless and/or Internet
based products with a major on-line brokerage operation and
an on-line financial news service before the end of the
first quarter of 2000. Either of these announcements will
have a positive impact on SmartServ's shares price.
5. The company has proved they can get a product to market.
Their internet based real time stock quote service and
attendant trading, reporting and order entry solutions are
licensed to DTN Wireless, for over $5.0 million. Given the
number of high flying companies that are still in the "lab"
with their products or referring to their business plan and
strategic alliances when justifying huge market caps,
SmartServ stands out as a company that knows what it takes
to sell, service and support a product in today's fast
The only negative we see at this time is the stock is
difficult to buy. This is due to the low float and unless
an investor is patient they may find that they will be
forced to take out offers to purchase stock.
We are not suggesting that anyone sell their core holdings
to plunge into SSOL, but we do believe this company offers
a tremendous opportunity to participate in the wireless
sector of the high tech market.
If you are an investor in the new economy SSOL should be
in your portfolio. The ownership of as little as 100
shares of this company could prove quite profitable.
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NOTE: We have not been compensated in any way, by any
person or company and specifically by SmartServ, or any
individual or company associated with SmartServ, for the
preparation of this profile. The profile is prepared for
our 200,000+ subscribers and is intended to bring emerging
high tech companies to their attention. The management of
SNN own shares in SmartServ purchased in the open market
at prices ranging from $16.50 to $23.00 and they may add
to, or sell their position at any time.