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Pete, IMO they MUST get institutional support and help ! Here is an example :
>>>GREAT PRODUCT. LOUSY INVESTMENT.
The happy resolution of a tech logjam recently prompted this Peter Lynch-like quandary: I'd found a product I loved; should I
also love the stock behind it? It's a conundrum that technology stock pickers often face when they're trying to invest in
companies whose gizmos they use and understand.
It all started late one night as I was finishing work on my previous Wired Investor column, the touched-up version of which the
FORTUNE copy desk in New York wanted to send to me in California. Two problems: The East Coasters in question aren't
real comfy with creating images they can e-mail me, and I don't have a fax machine at home. Mindful that it was too late to
knock on my neighbor's door to receive a fax, I remembered his suggestion the last time I imposed. "You should try out one of
those fax to e-mail services," my neighbor said, the '90s equivalent of politely saying that you should buy more sugar next time
you visit the grocery store.
So right then and there I fired up my Yahoo e-mail account, where I'd seen a button for Jfax.com, one of those services. I
signed up for a 30-day free trial, downloaded some software, and almost immediately received by e-mail a local telephone
number that I could give out as a fax number. I promptly supplied FORTUNE with the number, they faxed me the page proof,
and I received an e-mail with an image that looked just like the fax.
As I regaled my editor with the story of how easy this all was, he asked the same question that had been bubbling in my mind:
"Is the company public?"
"Dunno," said I. "I'll check it out."
Thus began my introduction to Los Angeles-based Jfax.com and its competitor, eFax.com of Menlo Park, Calif. Both are
publicly traded. Both offer free fax to e-mail services as well as other, for-fee products. Both have big expansion plans in what
they see as significant growth markets. Oh, and both have stocks that, in technical parlance, are sucking wind.
Jfax.com, which went public in July at $9.50 per share, is hovering around $5, a victim of the recent Net-stock volatility. And
eFax.com went public at $8 in 1997; it remains at about $8 today. Naturally, I wanted to know what had gone wrong with
both these stocks, as well as whether this niche would ever pay off.
Jfax.com was founded by Jaye Muller, a musician originally from East Berlin who was frustrated that, as he toured Europe, he
kept missing faxes. Jfax's specialty is offering fax numbers around the world, including Europe and Japan. It already has
partnered with a handful of big telephone companies to offer "unified messaging." And Muller boldly predicts more alliances will
fall into place. But Jfax.com was marred early on by missteps, including a botched $16 million deal with America Online.
Muller calls the relationship with AOL "a little miscalculated" because Jfax.com's technology and AOL's weren't all that
compatible. "Lots of people had bad experiences. We learned a lot."
Like Jfax.com, eFax.com hopes to hook users with free fax to e-mail, then make money by converting them into paying
customers who get higher levels of service. The company has succeeded in collecting money from 30,000 of its 1.25 million
users, says CEO Edward E. "Rudy" Prince III. He adds that if the company can double its conversion rate to about 5%, it will
be able to break even.
Despite the name, eFax started out with a very different business model. The company, formerly known as JetFax, once sold
fax equipment to hardware makers, including Hewlett-Packard. But when demand from those customers failed to live up to
expectations, eFax changed gears, says Prince. To further complicate matters, analysts at the underwriters of eFax's IPO
stopped following the stock after the shift in strategy, leaving the company without coverage on Wall Street.
It still has support in Silicon Valley, however. "I think eFax.com is heading for greatness," says eFax investor and venture
capitalist Tim Draper, who made similarly bullish comments even before eFax ditched its old strategy. "I run into as many
eFax.com users as I do Hotmail users," he says, referring to the free e-mail company his firm funded before Microsoft bought
it. "eFax users tend to be the early adopters."
The problem for Jfax.com and eFax.com--each acknowledges that the similarity to the other's name is confusing--is that being
the first mover may not be enough. Privately held ThinkLink and onebox, both funded by top-tier Silicon Valley venture firms,
are readying competing services. Moreover, some big phone companies already offer unified messaging and could easily step
on the upstarts if they care to.
I'll probably keep using Jfax.com, especially if I can figure out how to avoid paying for it. But for investors, the story of eFax
and Jfax is a classic example of a great tech product that doesn't necessarily make for a great tech stock. <<<
The part I would ask you to pay attention to is :>>>
To further complicate matters, analysts at the underwriters of eFax's IPO
stopped following the stock after the shift in strategy, leaving the company without coverage on Wall Street. <<<
IOW, without coverage even a great product can be a lousy investment...
Now PNLK is not exactly in the same situation, heck PNLK is not even on the NAS yet. That why they need even more support from those who know how to market a company and increase it's share value, obviously GZ & JPC are not too
good at it, they may not even realize they have a problem here...
...and that's what's worries me !
Good day. |
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