Phoenix Technologies (PTEC) Message Board

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Technology Stocks : Phoenix Technologies (PTEC)

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To: John B. Dillon who wrote (3210)	3/30/1999 10:51:00 AM
From: Mark Brophy	of 3624

VCs always invest in too many companies. They don't know how to identify the winners, so they invest in 10 companies and hope that the single winner makes up for the losses in the 9 losers. It's typically a good strategy because the IPO market overvalues companies by at least a factor of 10. For example, SystemSoft and Xionics each had a market cap over $300m when they were being hyped by the investment banks and now the combined market cap is $37m. Internet stocks are overvalued by a factor of 100 or 1000. Phoenix paid $9.4m for VChips (1.1m shares * 8 ½) and $27.5m for Sand. The VCs probably invested $5-10m, so it doesn't make up for their losses in their other 18 SIP losers. They've been trumped by Phoenix, Mentor, DSP Group, MIPS, ARM, and Rambus. The public companies have done a better job identifying the winning niches and nurturing them for many years. There are no quick bucks to be made. But, it will be worth it in the long run. I'm concerned that Craig Slater left Phoenix. Clearly, he doesn't believe that the SIP group will spin out an IPO or that he won't benefit personally. I hope he has the patience to stick it out at SiCore.

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