expressnews.com
Data Race decline riles shareholders
By Don Sheron
Express-News Business Writer
Frustrated shareholders of Data Race Inc. lashed out at management Thursday for lacking an aggressive sales campaign and not communicating effectively with investors.
Their concerns, expressed at the company's annual shareholders' meeting, focused on Data Race's declining stock price, quarterly financial losses and struggling efforts during the past several years to bring its product line to market.
"When are we going to see the light at the end of the tunnel?" asked shareholder Randall Hoofard.
Data Race's stock has declined steadily from a high of $24.38 on Dec. 30, 1996, to a low of $1.25 on Thursday, when it dropped another 25 cents.
Shareholders' concerns were further compounded at the meeting after learning the company had posted another quarterly loss.
For the first quarter ending Sept. 30, Data Race reported a loss of $2.4 million, or 12 cents per share. In the same quarter a year ago, Data Race posted a loss of $2.3 million, or 26 cents per share.
Revenues for the quarter ending Sept. 30 were $536,000.
The company has not posted annual net income since 1995. For fiscal 1999, which ended June 30, the company reported a loss of $8.5 million.
"We deserve a flogging," Data Race chairman Jeffrey Blanchard told shareholders.
Blanchard defended company officials during the meeting, but acknowledged afterward that changes may be in store.
If Data Race is in the same shape a year from now, Blanchard said those changes could include anything from shaking up management to a sale of the company.
The sale of Data Race was raised at last year's shareholders' meeting when the company announced it had hired an investment firm to look for a strategic partnership.
Data Race President W.B. "Ben" Barker said the company isn't currently seeking a merger or sale of the company.
During the past several years, Data Race has had to reinvent itself after its custom-modem business dwindled while the computer industry moved toward open-systems architecture.
The company has sought to build its presence in computer communications by developing its Be There! multiplexer for Fortune 500 companies.
The multiplexer allows for simultaneous transmission of voice and data over the Internet. The multiplexer will compete against emerging products that provide voice-over-IP (Internet protocol) capability, or the ability to make phone calls over Internet connections.
Barker has said during the past year — and again at the Shareholders' meeting — that sales have been disappointing and that the company was trying new sales channels.
He added that the company has tried to broaden the market for the multiplexer by approaching Fortune 1000 companies.
Recently, Data Race came out with a test version of an Internet service provider — OnePhoneLine.net — that works like the multiplexer but is scaled down for the home computer user.
Data Race hopes to hire a vice president of marketing soon to boost sales, and will begin advertising its consumer product line with ads in movie theaters beginning today.
Barker added that the company also is trying to sell network servers to several Internet companies to support multiplexer technology. However, no specifics were announced.
Several shareholders said Thursday they plan to stick with the company because they see promise in the multiplexer product.
They added, however, that they would like management to better communicate with shareholders.
As an example, some shareholders said they learned for the first time Thursday that Data Race had lost a patent infringement lawsuit against Lucent Technologies, but that the U.S. District Court in San Antonio also said Data Race's multiplexer patent was valid.The ruling was handed down Oct. 29. Some stockholders said the company's delay in presenting this information put them at risk of short-sellers who could have found the court's ruling much earlier on the Internet.
Blanchard said the company needed time to analyze the court's findings and felt it was more appropriate to disclose it at the annual shareholder meeting. Data Race said it would weigh its options concerning the lawsuit.
Thursday, Nov 4, 1999
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