Not to disagree with those expecting the "next" PR to launch the stock to the moon, but allow me to offer a couple of observations concerning today's PRs:
1) The company needs cash to execute it's business plan. It secured that cash today in the form of the private placement and warrants.
We don't know exactly WHEN this placement was negotiated, but I think it safe to assume that it wasn't TODAY (which makes comparison to today's share price a bit irrevelant, don't you think?). And given that in the last several weeks the share price has come from the $2.30 range up to the current value, $2.50/share is not IMO an unreasonable price for this type of financing. Irregardless, someone with some fairly deep pockets thinks enough of TKO to pony up $10 million...that should say plenty to TKO shareholders.
2) The two acquisitions announced today are not as yet FINAL. As such, I would certainly not expect TKO to include the names of the companies in the PR. Do the shareholders REALLY want any of TKO's competitors or potential business partners to know the identity of these companies and to know that they would entertain a buy-out offer? This is business, we're not sharing the name of our favorite geranium with the local garden club. For the same reason, I would not expect them to provide any detail on current revenues or cash flow from the two companies until signed agreements are in place.
3) The two acquisition candidates should bring additional revenue to TKO. Both sound as if they have significant numbers of existing client relationships. From the PR:
...the Company has entered into a Letter of Intent to acquire a leading technology developer of energy management systems. Their proprietary energy management controls eliminate wasted energy from heating and cooling unoccupied spaces. Tens of thousands of systems have been deployed in a wide variety of settings. Telkonet plans to incorporate the Telkonet iWire System(TM) to network these energy management controls.
and...
...The contemplated acquisition would increase Telkonet's current hospitality base from 300-plus hotels to 1,800-plus hotels, with more scheduled for installation, adding significantly to Telkonet energy management opportunities as well.
4) Ultimately, sustainable share value derives from revenues and earnings. This "leading US wireless hospitality company" no doubt provides their services on a recurring revenue basis. If that's the case, it would seem to me that 1800 hotels would generate a nice revenue stream. The energy management developer has "tens of thousands of systems" deployed. It seems a safe assumption that they will bring revenue to TKO.
5) Successful businesses are successful because they sell stuff. In business, your best prospect is an existing client. These acquisitions provide TKO with literally thousands of built-in prospective clients in two of their niche markets.
My last piece of friendly advice would be to think more like investors and less like stock traders. Management took a couple of nice steps today to capitalize and expand their business. IMO, Investors should view this as optimistic.
Traders....well...they didn't get the instant gratification they were looking for. Maybe next week...
Later,
W2P
