e.Digital Corporation(EDIG) - Embedded Digital Technology Message Board

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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology

EDIG 0.0001000

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Mar 20 5:00 PM EST

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To: Dave Swanson who wrote (16352)	12/3/2000 12:55:54 PM
From: JimC1997	Read Replies (1) of 18366

Dave, This element of this discussion about contract disclosure that is relevant to e.Digital investors is that when such contracts are announced the price of the stock will clearly rise significantly. In my opinion (as a Chartered Financial Analyst) the current price does not reflect any revenue from a major new contract for juke boxes or portable music players. I believe that the expected cQuence medical voice recorder system revenues alone can support a stock price for e.Digital in the $2 to $3 range. Now that Lanier has sold its voice products group to an entity with the capital resources to effectively market that product (and to purchase the inventory from e.Digital needed to support that marketing effort), we can expect the cQuence revenues to increase substantially. Lanier was being crushed by a huge debt burden and needed to aggressively conserve its cash. This resulted in the deferred orders to e.Digital that we saw this past year. A more representative order flow to e.Digital on the cQuence product would be about $12 million per year, given the current penetration rate of the entire cQuence system in hospitals. Assuming a price to sales ratio of 25 for the capitalization of the company, the cQuence business would support a total market value of $300 million. This equates to a share price of $2.36, given 127 million shares outstanding. Keep in mind that the cQuence line is expected to grow rapidly in the medical field and to be expanded into other sectors such as legal and law enforcement applications. Consequently, I suggest that the market is currently giving no value to prospects for e.Digital in the digital music field. My position in this stock is based, in part, upon my belief that there is a huge disparity between its current market price and the likely future value of this company should it achieve the success in the rapidly developing digital music market that it seems capable of. We have been given strong indications from the senior management of e.Digital that very large contracts are under negotiation for juke boxes and portable digital music players. The fact that the market price does not reflect the potential value of these contracts is not an indication that they will not exist in the near future. Rather, it offers an enormous opportunity to those of us who do believe that these large contracts will be finalized and are willing to assume the risk associated with a development stage company. JimC

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