Tuesday, February 05, 2008

GSOL's turn for some limelight

There's still plenty of hoopla surrounding Microsoft's bid for Yahoo! and its implications for China and, in particular, Alibaba. One blogger even proposes Jack Ma for non-executive Chairman of Microsoft China.

But Global Sources is not going to let the boys from Hangzhou steal all the limelight and has made its own modest dent on the market by announcing a $50 million share buyback programme. That's about 7.5% of the company's value at yesterday's prices.

"Why not?", we say; when your share price has fallen over 3 months from $35.35 to $14.22 at yesterday's close (and it had been almost $1 lower than that). Those within presumably know it's the same company and either wasn't worth double what it is today or...and we assume this is the line they'd take....not worth half what it was three months ago.

Others agree: Seeking Alpha published yesterday a commentary from "Wall Street Mayhem" titled "Global Sources Growth Prospects are Still Strong". We think the basic argument is decent:

The core B2B business at Global Sources is still strong. Even after the recent downside revision on 2007 revenue estimates, revenue for 2007 is now expected to be $182 million compared to $156 million in 2006 and $112 million in 2005. Fourth quarter growth in on-line revenue and revenues from mainland China were up 20% and 28% respectively from the fourth quarter of 2006. The revenues for print media were lower than expected, but at Wall Street Mayhem we don’t see that as a problem going forward. Did any of the investors that were buying the stock back at $35 a share hope that print media revenues would take off? Nope, there were interested in the on-line revenue and sources fairs which are still on track.

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