iGen Networks Corp (IGEN)

[Rheeper]

When Airvana was acquired in 2009 for $530m, the implied price-to-sales multiple based on 2009 sales was 8x. P/E is irrelevant because Airvana posted losses in 2009.

Looking at what IGEN could be worth to a potential suitor, the suitor will apply a premium or discount to a takeout multiple based on IGEN’s growth prospects, financial position and subjective factors such as corporate governance, etc.

Assessing IGEN’s earnings power, the CEO hasn’t provided any guidance which is great because I believe there is going to be potential for massive upside surprise (E.g. TPTW) given the new distribution channels and product launches. One poster indicated that the County Executive partnership could be worth $25m in sales, but it’s not clear if that’s annual or for 3 years.

Assuming a conservative sales estimate of $2m and a target 8x price-to-sales multiple, that would imply a valuation of $16m or over 4x from current levels.

Assuming a blue skies sales estimate of $10m and the same 8x multiple, that would imply a valuation of $80m.