Violent Capitalist's  Instablog

Dear all,

While I agree that $4 share is a nice gesture, it does not really reflect the true value of the company. At a time while Hurray! has been investing and expanding into content in a growing consumer market disrupted by larger economic forces, does not mean that a 100% premium offer is a good one for investors.

The company has $60mil in cash on the balance sheet, effectively giving you the company's operations for about $30million. I see the company being able to produce $6million in cash flows easily. That needs to be accounted for.

I think a 10x multiple is fair, making the company's operations worth $60mil, or $120mil altogether by adding the cash hoard as well. Therefore, I propose a share price of $5.50 to be an acceptable starting point, effectively accounting for very little growth. I believe a more acceptable valuation of the company and its prospects will get management interested in what you have to say! You can always make the deal contingent upon due-diligence efforts and such anyways (which is also normal practice for serious bidders).

Regards,

--
Anuj Jain, CFA

disclosure: I am long HRAY