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Technology Stocks : NewKidCo International (OTC:NKCIF) (TSE:NKC)
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To: esecurities(tm) who wrote (123)3/27/1997 11:30:00 AM
From: esecurities(tm)   of 4231
 
Projected Q3 profitability. Our comments.

from fy '96 financials:

>Dave Gurney, Chairman and CEO of SoftQuad said that although he
>was very pleased with the large increase in annual sales, the
>company is currently reassessing it's cost structure and product
>strategy and is implementing a restructuring plan in order to
>reduce expenses and achieve profitability. It is expected that
>this will result in a reduction in workforce, consolidation of
>facilities and other cost reduction measures involving cuts in all
>areas of the company. The mix has not yet been ascertained. The
>company is currently examining profitability of its product lines
>on a contribution basis, and expects to be in a position to begin
>implementing the changes within the next few weeks.

Q: How can the company project profitability given SWEBF's losses and the CEO has just confirmed they are only now 'reassessing it's cost structure' and rather unconvincingly stressed importance of returning to profitability in the live conference concomitant with a weak or no understanding of its IRR per product line. We believe two things may be occurring at this time: 1) the lead SWEBF IPO underwriters are looking for a takeover given the $19 million cash position. 2) other company(s) are looking at SWEBF given dominant market share in burgeoning internet industry and $19 million cash position and or 3) or are looking for a change in management. SWEBF appears to be 'in play' given the state of the industry and all information known about SWEBF including today's live conference.

These are each positive scenario's in our opinion.
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