More company for ZSUN. IBIZ and BIGG take the fall
stockdetective.com
June 14, 1999
Sponsored by WallStreet Guru
Thanks to the Stock Detective's vigilant readers and a bevy of stock promoters, we're flush with tips about stocks that most people should think twice about before investing. All them may not warrant full Stinky Stock status, although we're sure a few inevitably will come from this list. Until they reach that benchmark, Stock Detective wants to warn readers about stocks that should have you seeing "red." What sets them apart? Take your pick: volatility, high volume, wild price swings, outrageous claims, a stack of vacuous press releases, or maybe a share price that doesn't seem to add up from the sum of the company's parts.
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Bingo.com (OTC BB: BIGG) is the latest in rash of online gaming sites to come to our attention. Now the industry alone should give investors pause. Whether online gambling is legal in several countries, including the U.S., is still a gray area. In fact, it's been outlawed in Nevada. And while people who like to "roll the dice" online may not be subjected to raids from the local P.D., who are they going to call if the house doesn't pay off? And, like its other Vancouver, B.C. gaming brethren, Bingo.com is licensed in the Third World (Antigua), making it difficult for U.S. authorities to pursue legal action. Not that they won't try. The U.S. Department of Justice has a number of cases pending, including several that have produced guilty pleas. Credit card companies have also expressed concern about paying off gambling debts.
Aside from the legal issues, investors should also consider that Bingo.com was, until a week ago, non-reporting to the SEC. Within the past two months, the company's shares have spiked ($13.63), plummeted ($3.25 less than two months later) and are making another stab upward based purely on press release hype.
Bingo.com is part of the harem of tout sheet Wall Street Research Group, paying the promoter $4,995 for a glowing write up and a $450 monthly maintenance fee. This "report" includes financial projections for 1999 that predict earnings of $8.2 million on revenues of $33 million by Dec. 31. The report was issued six weeks before Bingo.com even beta tested its site May 18. Since that testing period, the company has been mum except for announcing its SEC filin
IBiz Technology Corp. (OTC BB: IBIZ) is also from the Wall Street Research Group corral. Like Bingo.com, iBiz paid the promoters almost $5,000 for a "report" and a monthly fee to maintain a presence on the tout sheet. Ibiz claims its niche is "small footprint" computers for limited workspaces. Ibiz is up against some pretty strong competitors. Compaq, Sun Microsystems and Apple Computer, to name a few, are all in this line of work. And when it comes to hardware, name recognition goes a long way - for good or bad.
But getting back to iBiz. Non-reporting to the SEC, the company has no audited financials available for investors to peruse. In fact, until late last week, it didn't even have an Internet site from which to do business. Funny, Wall Street Research Group's began promoting the company two weeks ago, going so far as to project $2.2 million in earnings on revenue of $20 million by the end of 1999. That's an 11 percent margin in an industry where even the most successful companies - IBM and Dell for example - have margins of only 8 percent.
Aside from these astronomical projections and the shameless hype, ("iBIZ Technology to Exhibit at PC EXPO '99 with Microsoft and Citrix Systems" is one example of the company's attempt to piggyback itself onto as many big-name companies as possible), iBiz is no stranger to other diversionary tactics. What would the average investor make of this statement, contained in Wall Street Research Group's report:
"Another example of a corporate market - This unit is extremely advantageous to car dealerships. Each dealership has approximately 100 workstations and there are 21,000 dealerships nationally giving 2.1 million workstations. This is more than the banking industry. There are more than 200 million corporate workstations and growing. Recently iBiz has completed 200 workstations at an Oklahoma bank and another 100 workstations at a San Diego bank."
Should investors infer that iBiz is already aggressively pursuing a substantial chunk of the corporate market? Why doesn't the report name the banks that iBiz has installed systems in? And, of course, the issue of what percentage of corporate workstations will ever convert to smaller format - dare we say a "small" one - is completely ignored.
As always, tread lightly…………………
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For previous Red Light District columns, go to StockDetective Archives.
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