This appears to be the continuation of another article, but I can't find the first installment...
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Financial News
A billion dollars or bust
Nathan Lipson
10/06/1999
Ha'aretz
Copyright (C) 1999 Ha'aretz Daily Newspaper Ltd. Tel Aviv, Israel; Source: World Reporter (TM)
Talk of terabytes
Marketing problems
$11m invested so far
What is even more surprising is the fact that these are not even "ordinary" shares. The shares of CDDD, which is what is known in America as a "public shell," are sold in the lower-status share listing known as the "pink sheet." The company is awaiting clearance from the Securities Exchange Commission (SEC) for an upgrading of its trading status.
CDDD has not done much to disperse the fog clouds shrouding it. For example, when it announced its merger with C3D (a company active in Israel, the United States and Russia), it did not even specify the nature of that company's products or services.
On September 22, CDDD issued a dramatic statement: C3D would present its revolutionary technology on October 4. The statement included details on CDDD's technology and invited interested parties to visit the company's website. The official demonstration took place on Monday. In addition to its technology, C3D revealed that its shareholders included Formula Ventures, part of Danny Goldstein's Israel-based Formula Group. A member of the audience was Shai Beilis, who chairs Formula Ventures.
"The company has excellent technology," explained Goldstein, "but it will now have to focus its energies on creating a production line and on establishing an international reputation for itself. When a company like this makes a breakthrough, it is judged by standards that are totally different from those applied to ordinary companies. With companies in this unique category, it is essentially a question of 'a billion dollars or bust.'" C3D 's product is a laser technology that enables data storage on optical media in multiple layers, thus sizeably increasing the data storage capacity of these media. The optical medium with which people are most familiar is the optical disk - whether it is used to play music or to store computer files and whether or not it employs video technology known by the acronym DVD. An impressive amount of data can be stored on today's disks: for example, you can store 20 gigabytes of data on two layers on both sides of a DVD disk.
C3D 's technology allows much greater storage capacity with the possibility of ten, twenty or more layers on a single disk. In the foreseeable future, predict company officials, we will see disks with an unlimited number of layers for data storage. C3D has produced a sample disk that is the size of a compact or DVD disk (13 centimeters in diameter) and which contains 10 layers on which 140 gigabytes of information can be stored. C3D is already speaking in terms of terabytes (1,000 gigabytes) and estimates that, within the next 12 months, it will be able to mass-produce disks with 140-gigabyte storage capacity. For instance, a map of the world with a resolution of one meter requires one terabyte.
Another medium that C3D has come up with looks like a little transparent plastic window. It measures 3 by 2 centimeters and is mounted on a rectangle the size of a credit card. C3D has already produced a card that has 20 layers capable of holding 10 gigabytes of information.
The development of the card was an even greater challenge for the company than the disk, because the technology for reading information on disks already exists: the disk revolves within a disk drive while a laser beam reads the information. However, to access data stored on its new card, C3D had to develop a new reading technology, which company officials hope will become an industry standard that will guarantee C3D royalties for years to come.
At this stage, C3D 's technology allows just Reading-Only-Memory (ROM) with regard to the information contained on its cards, although the next stage will be the development of a technology enabling users to write on a card an unlimited number of times.
The applications of this technology appear almost infinite and could be of critical importance in the present age, which is in constant search of ever-greater possibilities for data storage. However, although C3D may have broken a number of technological sound barriers, it could encounter serious marketing problems.One problem is directly related to the whole area of DVD technology. As noted above, DVD disks can hold 20 megabytes of information, which is much more than what is needed for a single movie of average length. In fact, 97 percent of full-length movies produced today can be compressed into five gigabytes, which means that they need only a quarter of a typical DVD disk's storage capacity.
The purpose of the added capacity is, on the one hand, to enable films to be taped by means of two different technologies on both sides of the disk and, on the other, to allow taping that uses advanced video technology, known as High Definition TV or HDTV.
C3D 's technology would enable several movies to be recorded on the same disk. While this sounds like an advantage, people familiar with DVD technology are not so sure that the copyright-holders of a given film will be thrilled by the idea that their movie will be sold along with a few others on a single disk.
A second problem is that it is not at all certain that the world's major disk manufacturers, particularly Japanese firms, will go along with this kind of technology, which will lead to a drop in their profits. C3D was established by a group of Russian-born scientists. It has managed so far to recruit some $11 million for its research and development activities. The company has offices and laboratories in Israel, Russia, Ukraine and the U.S.
C3D 's President and Chief Executive Officer is Professor Eugene Levitch and the board of directors is chaired by Yitzhak "Yatzeh" Ya'akov, a former chief scientist of the ministry of industry and trade.
The union of C3D with its "public shell" took the form of a "reverse merger": the shell purchased C3D while 73 percent of its shares were allocated to C3D 's shareholders. The product of the merger, CDDD, has a total market value of $310 million - on a par with Nice, Elbit and Fundtech.
Most of C3D 's shares, 60 percent, are owned by the scientists who created it, while 10 percent are in the hands of Formula Ventures and a Russian-owned holding company and another 20 percent are owned by C3D 's 50 staff members.
C3D has one competitor that uses a similar technology: an American company, Call Recall. However, says Levitch, Call Recall uses disks that are much larger than those used by C3D and which are not suitable for the needs of private consumers. According to Levitch, Call Recall is backed by the U.S. NavySeasoned traders on Wall Street were amazed last Friday to see the shares of CDDD catapult from two dollars (their price in April) to an incredible $21. |
