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Technology Stocks : Zitel-ZITL What's Happening
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To: Steven M. Kaplan who wrote (18053)10/18/1999 12:56:00 PM
From: Daniel Chisholm  Read Replies (2) of 18263
 
...now totally focused on Datametrics. The question remains: Can this new management team succeed where the old team failed miserably?

And if that question is answered in the affirmative, there is also the question: What is a fair price to pay for a successful Datametrics?

If I take their 30 June 99 financial statements and do the following things:
* add 2.94 million shares, for $5M convertible @ $1.70, and then move the convertible debt into "equity"
* subtract the $4.906M "other assets" - it's mainly capitalized interest, goodwill and purchased technology (i.e., all intangibles of no real value)
* subtract another $1M as an estimate of their quarterly burn, assuming they've been able to scale the burn down.

...I then get $4.325M tangible assets, and about $24.88M shares. This gives a diluted tangible book value of 17 cents per share.

As an operating entity, let's annualize Matridigm's $6.3M sales, giving $25M. I would expect that that would be worth at most a PSR of 1, which would be about $1 per share (essentially where it is today).

So, my guess is if they don't go bust (and I'd give them better than even odds of avoiding BK for a couple of years anyhow), I'd expect a fair value of somewhere between 15 cents and one dollar.

- Daniel
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