David, are you sure the Lucent deal and all its costs have already been accounted for? I just went back and read the 9/15/98 10-Q and I don't read it that way, although I certainly could be wrong as I'm no expert or even close to being one on such things. But, here is a paragraph I copied out of it.
"In December 1997, as disclosed in the Company's Form 10-
K, representatives of Lucent Technologies ("Lucent")
informed the Company that they believed that the Company's
products may infringe upon certain patents issued to Lucent,
and that Lucent was seeking compensation for any past
infringement by the Company. The Company has continued to
evaluate the assertions of Lucent and on August 25, 1998
signed a letter of intent pursuant to which the Company
expects to pay Lucent $9,200,000 during its fourth quarter
to settle this dispute. During the third quarter the
Company accrued $7,600,000 million as additional costs, of
which $5,600,000 was recorded as a non-recurring charge and
$2,000,000, which is attributable to the CPE business, was
recorded against the gain on the transaction and included in
other income. A portion of the proposed settlement amount
totaling $1,600,000 will be reflected, when paid, as prepaid
royalties and will be amortized to cost of goods sold over the
future royalty period."
I read it to mean they will pay, in one way or another, the 9.2 million out of Q4 and only paid part of 7.6 million of additional costs out of Q3. If I am right, which I hope someone shows me I'm not, there is more bad news to come. There are only 7.17 million shares outstanding and a 9.2 million bill all by itself will cost us all $1.32 a share. It also appears that CGRM only has 7.29 million in cash (that might be off).
Also, I noticed near the end of the 10-Q CGRM discusses the Y2K problem and they don't sound very positive on how they are dealing with that. In other words the drift I get is they haven't fixed it yet in all the software they sell.
So, what do you or anyone else think??? FWIW MJS |
