Photochannel Networks (PNWIF) by Jonathan M. Heller, CFA
Photochannel Networks (PNWIF)
One of the interesting microcap ideas presented at the Value Investing Congress West in May was Canada-based Photochannel Networks, whose business is providing online digital photography solutions for retailers. If you’ve ever electronically sent photos to a retail store for pick up, you may have used Photochannel technology.
Aaron Edelheit, of Sabre Value Management, presented the bull case for Photochannel , stating his belief that the company will continue to align with major retailers, and partners, pushing company growth. The company recently announced deals with Kodak China, Kodak Australia, Sams Club USA. A previous agreement with Costco is expected to launch this month.
Earlier this month the company announced record revenues of $3.3 million, up 147% from the same period last year, and a loss $2.6 million (vs. $718K). The loss was attributed to ramp-up costs, and the company believes it will be cash flow positive in the near future. Perhaps the best news of the quarter was that transactional revenue-the catalyst for growth- nearly tripled to $1.9 million.
Shares of Photochannel currently trade for $3.67, up 22% in the past year. Prospective investors need to keep in mind that Photochannel is an extremely tiny company, with a market cap of around $120 million, and light trading volume of less than 100,000 shares per day.
Jonathan M. Heller, CFA
No position in PNWIF