DCTC MEETING DAYTON OHIO SEPT. 17, 1996
In the interest of putting to rest any controversy over the following dialogue, I would like to add my two cents, for what it’s worth. First let’s look at the statements that both parties have made, then consider exactly what Roy has so effectively surmised:
Joe Medsker Wrote:
If you had been there you would have picked up
immediately that in fact DCTC is a stand alone company and they are not just riding
the FTEL star. IMHO it could be just the other way around. It will be DCTC that will
put FNET on the map. I talk with Joe Murphy at least once a day and until this meeting
I was not aware of the number of ventures and mergers that are pending. I believe the
Jack Adams gave an outstanding presentation on the future of FNET and the many
ways that DCTC will make it profitable for all of us. As for me I will continue to keep
the majority of my DCTC FTEL FNET investment in DCTC. FTEL's future is in the
hardware and in the telecommunication field hardware can become obsolete very
quickly.
Vic Klimpl replied:
as my ftel sinks into the sunset yet again, i have you and your ilk to thank for it. I guess
you believe that dctc is the driving force. Fact-ftel presently owns 100% of fnet and
dctc still has to earn its 50% ownership by providing the finance.FACT2-When
Murphy was pressed for details on his many corporate initiatives he evaded specifics.
Again it was not my intent to bash dctc but i will not stand by and allow you to
promote dctc at ftels expense.
Roy DeRousse concluded:
I also disagree that DCI is "riding the FTEL star." I didn't believe that going into the
meeting, and I feel even more strongly so afterwards. IMO, both companies would do
OK separately, but the synergy between them is VERY important. The high level of
experience that the DCI management team brings to the table in financing and
marketing is something lacking in the current FTEL organization. In the same way,
some of FTEL's technical innovations will be very important to DCI's plans.
Lets start by saying that I am trying to evaluate the entire DCTC/FTEL/FNET relationship as subjectively as possible.
As the publisher of a financial newsletter, it is my duty to inform, by providing commentary that is the result of making deductions based on facts. In doing so, it is sometimes difficult to be subjective, especially when your opinions are skewed because of a sizable personal investment at stake in these two companies, but I will try.
In the case of DCTC/FTEL/FNET, I have been invested in both companies, based on FNET being the binding factor and nucleus of my investment decisions. There in lies the confusion, controversy, and a potentially costly mistake.
After having attended the DCTC meeting in Dayton the other day, one thing became evident, basing your investment decision, solely on the proposed FNET IPO would be a big mistake. DCI and FTEL are two separate and distinct companies, and should be viewed as two distinct and separate investments, period.
Please take notice that I referred to the meeting in Dayton as DCTC's, not DCTC/FTEL/FNET meeting, and would go further to say that in the future we should eliminate any confusion or misleading headings that refer to these companies under one heading. From here on out, I would recommend that you view this subject matter more accurately as DCTC and the FTEL/FNET venture. It would also be prudent to evaluate each company (DCI and FTEL) on it's own merits and potential.
With that said, let's go back and look at what Joe, Vic and Roy have stated.
Again Joe Medsker Wrote:
If you had been there you would have picked up
immediately that in fact DCTC is a stand alone company and they are not just riding
the FTEL star. IMHO it could be just the other way around. It will be DCTC that will
put FNET on the map. I talk with Joe Murphy at least once a day and until this meeting
I was not aware of the number of ventures and mergers that are pending. I beleive the
Jack Adams gave an outstanding presentation on the future of FNET and the many
ways that DCTC will make it profitable for all of us. As for me I will continue to keep
the majority of my DCTC FTEL FNET investment in DCTC. FTEL's future is in the
hardware and in the telecommunication field hardware can become obsolete very
quickly.
Joe is correct in stating that it is evident that DCI is a stand alone company. On the other hand,
Joe is totally out of place in stating that he feels FNET ‘s success is dependent on DCI. If that was the case, then why did Jack Adams spend so much time explaining not only FNET, but how a great many
(5 of 14) of the proposed DCI ventures apparently revolve around the FNET project. What would have been accurate to say, is that DCI has the marketing plan that will enhance FNET's success. It is apparent Joe Medsker does not grasp the full impact as to what Franklin has on the drawing board, or he would not have made his last statement, implying that FNET is a one pony show. Far from it.
On the other hand, Vic, who is an executive and veteran of the communications industry, is very knowledgeable of what Franklin has, and based on that has made investments in both companies, and presently is weighted in favor of FTEL.
In all fairness to both parties, I do not feel that Joe Medsker was trying to trash Franklin, nor was Vic trying to personally attack Joe. Joe's comments certainly did not have any bearing on either stocks performance yesterday. As I stated earlier, it is my opinion that both companies should be evaluated on their own merits, and any association between the two (FNET) , should be looked upon as the bonding agent that has it's own individual merits, and again should be evaluated in the overall equation.
Roy summed it up nicely, and as for how you invest your money, whether is in DCI, FTEL, or both, it should be based on each individuals own assessment and tolerance to risk.
Now, with all that said, I will try to give you my assessment of the DCI Communications meeting in Dayton.
Before we start, I want to state one other fact that will further drive home the point that this was a DCI meeting and not a DCTC/FTEL/FNET meeting.
I had been requested to speak at this meeting, to present Franklin's involvement and relationship, and to answer any technical questions that may have been asked. As it turned out, I did not speak, because it was clear that this was to be focused on DCI, and not to be confused or diluted by presenting Franklin. This could also figure heavily in why Frank Peters was not present, besides the reason given.
To also set the record straight, the meeting in Dayton was the direct collaborative effort of Joe Medsker and Joe Murphy, it was their show. Joe Medsker is a Financial Planner in the Dayton area, and through Brad Driesen ( a client), Joe was introduced to DCI Communications. Joe Medsker has a large clientele and had asked Joe Murphy if he would be interested in coming to Dayton , to present the DCI story. Both Brad Driesen and myself, then were asked to invite our contacts to the meeting.
Of the 128 attendees, the audience was split between Joe Medskers' clients and those that were there upon Brad and my invitation.
Agenda:
Joe Murphy led off the meeting by presenting DCI's Vision and Mission. That was followed by John Adams, (Marketing) giving an overview of FNET, followed by Larry Shastoff (COO) explaining the Privilege Card. Joe Murphy then presented some financial projections for DCI, followed by a proposed financial offering of a 10% cumulative preferred. We then broke for a short intermission, and reconvened to have a question and answer period.
The following are some of the highlights of those separate segments, I do not expect it to be complete, nor do I have the time to fully explain each note. Use it as reference to ask further questions. Many of those that attended can add further, because in no way is my rendering complete, but hopefully it is as accurate an accounting as I could take notes on. There was a lot to absorb, and it was a long and multi-faceted presentation.
Joe Murphy: Vision and Mission
DCI Privilege Card
*FNET (joint venture(JV))
*ISP - Serving 3 states (Business Combination(BV))
*Prepaid Phone Card
Telephonica Systems (JV)
Vie Nouve (JV)
Lan/Wan Company (BC)
Alpha Products
*Video Teleconferncing (JV)
Web Site Certification Company (JV)
*Internet Electronic Commerce & EDI Software Company (?)
R&D Scientific (?)
Muller Media (acquisition)
* indicates what I assume will most likely hinge around FNET involvement/realization (there are few others that could also possibly qualify, I plan to find out what is what)
As you can see there is more depth to DCI then just FNET, and a lot of emphasis was put on the Privilege Card as being the tool to market many of these other potential revenue streams. More on that later. Most are either joint ventures or business combinations (?), of which it was not disclosed as to where they were in the negotiation cycle. In effect, letter of interest, letter of intent, solid negotiations, final stages, signed contract, etc. I feel this is very important to find out and to what involvement or requirement they have to provide to bring it to fruition.
John Adams: FNET Overview:
Wireless Services
Internet Access Services
Software Modem
Dedicated Client File Servers
Voice & Fax Mail
Conference Calling
Web Page Design & Hosting
Fax & Store & Forwarding
Future Services
Internet Fax Services
Voice Server
Information File Server Banks
Int'l Call Back
Video Conferencing
Electronic Catalogues
Cyber Malls & Online Shopping
Larry Shastoff: Privilege Card
If I understand it correctly, which I think I do, the Privilege Card will be the vehicle to market many of these services, both regarding FNET (Phone card) and other services in the form of shopping, along with discounts and other benefits.
One of the most important aspects to have understood regarding this concept, is that it is already heavily embraced in Europe and S. America. DCI has already recognized this, and have established key alliances already with Telephonica Systems (S.A.) and Vie Nouve (Europe).
It is my opinion that understanding the Privilege Card, it's potential, and how it fits into the scheme of things, is to have a good understanding of DCI and where they are going. It is also a key element in the marketing of FNET, so FTEL investors should do further diligence into this aspect.
Joe Murphy: Projections of DCI financially.
This was not on the overhead long enough to get notes, but because I don't miss much when it comes to financial projections, I will say that it looked to be very realistic, and I'd go even further to say that it was ultra conservative, utilizing a modest 15 P/E. The bottom line showed that they projected a stock valuation of between 3.25 to about 7.00 based on EPS of between approx. .20 and .45 or so. Remember this is off the top of my head, so someone who took notes may have the exact numbers. The P/E ratio of 15, I am sure of though.
The proposed offering I will save for later, simply because it was stated that nothing is finalized and that this was not being presented as an offering, but a rough idea of what they were contemplating as being a vehicle for raising additional cash for funding the various projects that they had discussed earlier that evening.
In closing, I would say that I feel DCI has a very aggressive and capable management team. They possess a well rounded compendium of experienced talent and it is apparent they have been around the block. I feel that with the agenda that they presented it will be tested to the fullest. They have a full plate, and from the sounds of things they are running at the speed of light, just to stay on track.
I wanted to extend my sincere thanks, for taking away from valuable time to share their vision, it was appreciated by all.
Now let's do our homework, and remember that DCI and FTEL are two separate investments, lets treat them as such.
Raleigh |
