Market Gems:Stocks w/Strong Earnings and High Tech. Rank Message Board

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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: Jenna who wrote (45367)	6/21/1999 11:02:00 AM
From: Whisperer!	Read Replies (1) of 120523

Why CUST is real Dog.... Fundamental Research on CUST: Why is the stock still holding up at these levels? Can anyone who is long post some fundamental facts on why someone should pay 500M+ (or ~400M without the cash) for a company that is pre-product and pre-revenue? In the private market (where most companies at this stage are) this company could raise money at a 10-60M valuation (60M would probably have a ratchet based on next 12 months revenues), but they would never get 500M. If you look at the valuation multiples that one of their competitors was acquired for you'd only see 7-10X last year's revenue. Is there something I am missing? According to the research, this is 1) a very busy space 2) a company with a management team that failed with its first venture (which now lets you know you have 100% downside on the investment) 3) competitors with product functionality that is very robust and secure, 4) the company has no distribution channel 5) the product requires vendor coordination/installation to work making the revenue model less scalable 6) they don't have any beta customers announced 7) they don't have a trusted brand name and will likely lose all the equity in their existing brand name because they won't be doing anything with CDs anymore and will need a more trusted, secure name. Does anyone here believe that they are trying to solve a problem that the existing competitors can't solve or are ignoring? This is a stock that SCREAMS to be shorted.

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