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Technology Stocks : Fonix:Voice Recognition Product (FONX)
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To: Nancy McKinney who wrote (2478)10/20/1999 12:39:00 AM
From: Fairways9  Read Replies (1) of 3347
 
Did you know that fonix has a net operating loss (NOL) carry forward of about $85 million at 12/31/98?

That means that fonix or an acquiring company could use that to offset future taxable earnings. What is that NOL worth? To fonix right now it is worthless. To an acquiring company it would be worth the company's marginal tax rate times the NOL. MSFT's marginal tax rate is 35% (see fdcpa.com.
The value of that NOL to MSFT would be about $35 million ($100 mil NOL times 35%).

What is fonix current market cap? Kind of hard to figure. There are approximately 80 million shares outstanding before all the preferred stock and debentures are converted. If you assume that the holders of the preferred stock and debentures would take the face value for those shares, fonix could be bought out for about $45 million gross and $10 million net after considering the NOL. Of course that assumes that the buyout is at prices this morning. The buyout price would rise dramatically if fonix were to get back over $1.

It was pointed out on the yahoo board that any acquiring company would also have to assume fonix current liabilities of about $1 million. But my analysis doesn't consider the income tax benefit of the NOL for State taxes. I think these two issues together make
my analysis above even more conservative.

The point of this analysis is that there is very little down side risk to investing in the co at $.25 per share.

Remember that fonix also has Epson and Infinion (Siemens) saying publicly that fonix has great technology. Also, Intel and Lucent have ties to the company.
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