Profitability ?, page-11

In Aus, Nearmap is not squeezing anyone since they are the only dominant player in the market.

In US, Nearmap is obviously squeezing the bigger players and EagleView is one of them.

Ever since Nearmap disrupted the US aerial imagery market, EagleView is worry that they will lose considerable market share in their own turf so they came to AUS looking for technology that will assist them in defending against Nearmap.

Since SFI has the only technology that might stand a chance in defending themselves against Nearmap in the US, EagleView struck a deal with SFI.

Rest assure EagleView's number ONE priority is to 'adopt' the SFI technology and defend their US market, they are not really interested in helping SFI do well in AUS (which is after all a much much smaller market than the US and they are unlikely to deploy or even invest within AUS in the long term).

But lets assume:

1) SFI's technology will give EagleView a fighting chance in defending their US market share
2) EagleView will takeover SFI someday because they want the technology all for themselves
3) EagleView does not want to enter the AUS market & try to play catchup with Nearmap (because AUS is ten times smaller than the US and our taxation & business running costs are a lot higher etc...)

In such a scenario, the takeover price of SFI will ultimately depend on the present & future valuations of the whole business, which means if SFI becomes successful and makes a profit then EagleView will have to pay MORE for SFI. But if SFI fails to turn any profits in AUS for whatever reason, this will in fact be GREAT news for EagleView as they can now bid whatever they want to acquire the SFI technology & IP (which I believe is their ultimate plan all along).



So as a long term investment and as an independent entity, SFI's long term outlook is going to be somewhat capped from the above scenario.

Come to think of it, SFI is truely stuck between a ROCK and a HARD PLACE.
If SFI does well, EagleView will own a BIG Chunk of their business and if they don't do well then they are immediately under a cheap takeover 'gun barrel'.