After the market closed on November 26,
TheTruthseeker.com, an interactive online magazine, sent
a warning on the stock saying, among other things, that
Ariel is simply repackaging the product and has no
manufacturing facility and that ãAriel is consumed in
red ink and is almost out of cash.à The online magazine
reissued its ãstrongest warning to dateà last week and
recommended that investors sell.
njbiz.com
Date: December 6, 1999Section: Invest NewJerseyLocation:
Title: Stock to Watch: ArielAuthor: By Geeta SundarmoorthyDeck:Story:Ariel, a
Cranbury-based provider of high-density remote access
modem cards for accessing Internet and other online
services, went on a roller coaster ride on Wall Street
in the last 10 days. Signs suggest the ride may now bein its last lap.
The day before Thanksgiving,
Ariel (Nasdaq:ADSP) announced its product had received
worldwide certification for connection to international
digital telephone networks. It also said that Internet
Service Providers (ISPs) who use Arielås remote access
card to connect to the worldås major network will spend
$100 per port less than those of its competitors--Lucent
Technologies, Cisco and Ascend, now part of Lucent. That
day the companyås stock rose almost 202% to $10.75. The
day after Thanksgiving, investors were still celebrating
the news. In a dizzying day of trading on November 26,
Arielås stock, which was languishing below $5 for much
of this year, went as high as $57, and finally closed at
$37, an increase of nearly 245%. In one week, Arielås
stock rose from $3.72 to $37--a 10-fold increase.
But when Wall Street took a second look, the news about
Arielås modem didnåt seem as exciting. It was not a new
patented technology, its competitors were giants and the
market is limited. A couple of analysts then lowered
their ratings, triggering a rapid descent of the stock
from last Monday. Then other damaging opinions started
to arrive. After the market closed on November 26,
TheTruthseeker.com, an interactive online magazine, sent
a warning on the stock saying, among other things, that
Ariel is simply repackaging the product and has no
manufacturing facility and that ãAriel is consumed in
red ink and is almost out of cash.à The online magazine
reissued its ãstrongest warning to dateà last week and
recommended that investors sell. Following that,
Mike Latimore of John G. Kinnard, a securities
investment company, lowered his rating to a ãsellà from
a ãneutral,à and Anthony Stoss of EarlyBird Capital cut
his rating to a ãholdà from a ãbuy.à Latimore told
Bloomberg last Monday, ãTheir [Arielås] track record
is not quite developed yet. They have good technology,
but they donåt deserve to be at this premium.à He also
said that the company is short of cash, with only about
$6 million in hand and is using $2 million a quarter.
Arielås shares fell $22.5 that day to $14.50. Since
then, the stock has been hovering between $12 and $14.
Last Friday, the shares closed dropped to $10.75.
Jim Nicholson, president of Westgate Capital Management,
told RadioWallStreet.com in an interview last Wednesday
that over time, the stock price will come down to single
digits. Even if the market momentum keeps the price up
for while, it canåt last long, he added. Nicholson
pointed out that offering similar products $100 cheaper
per port than Lucent and Cisco is not going to help the
company. ãThese companies can quickly adjust their
prices to compete with Ariel. I canåt imagine that
Lucent and Cisco cannot offer cheaper products thanAriel.à
Nicholson advised anybody who is holding
on to the stock to be careful and sell as soon as
possible. He cautioned investors that the stock should
not be trading so high. ãIt is not fundamentals, it is
simply momentum that is keeping the stock in the current
range, à he said. ãIt was overdone even at $10. It would
be different if they had developed a new or patentedtechnology.à
After acknowledging high activity in
its stock as it hit new highs, company officials havemade no comment. |
