Art,
After the big run in October and November, I think there was a lot of anticipation that a big news event would come along to send the stock into orbit. COMDEX came and went, but it was still possible to believe that SPYG was working on the big deal that surely would be announced soon. And then, a few days ago, news finally hits, and it was a deal with an important new customer, but not a blockbuster. I think some disappointment set in and sparked a bit of selling -- which made potential buyers step back to see if they could get better prices -- which made it easy for the MMs to spike the price down and take out stops (Thursday's quick dip into the 24s) -- which generated yesterday's wholesale fear.
It amazes me, given the news vacuum we've had since the SurfWatch sale closed, that SPYG held up so well for so long. Yesterday was the first day of fear we've had since dipping below 10 a couple of months back. That's amazing, given the run from 10 to a recent closing high in the mid 29s.
I think SPYG is getting lost in the shadow of WAP and mobile telephony. The projected numbers for mobile telephony are huge: 1 billion users within five years, half of which will have Net-enabled devices. SPYG's licensing deal with Xerox for digital copiers -- which will amount to, what, tens of thousands of units per quarter -- looks tame by comparison with the telephony projections. The same goes for the deals with Rockwell (thousands of seats), VM Labs (projected DVD market in the 5-7 million range over the next few years), and so on. The buzz about the non-PC device world, right now, is quantity, and it's not yet clear that any of SPYG's licensing deals will yield commercial products with massive leverage.
One thing that would help SPYG is if it came out with some "status-report" PRs from time to time, taking inventory of its huge backlog of licensing deals and telling investors where some of these relationships stand. SPYG has deals with so many important companies, but it's impossible to know where those relationships are going unless the company tells us. For example, SPYG could at some point have announced that Xerox had successfully integrated the MicroServer and that the copiers had gone to market. SPYG could even have told us which copiers, so we could go check them out! This was a long-forgotten licensing deal signed in early 1997 that, by 4Q1999, was generating 5 percent of SPYG's revenue. This was a perfectly material piece of news and would have been ideal for a status-report PR, but we didn't even learn about the commercial progress of the deal until the earnings announcement came out. How much more licensing revenue is being generated that we don't even know about at this point? We don't need to have every cent accounted for through PRs, obviously, but some deals stand out and are worthy of note, especially when they involve years of shared labor and do finally yield a highly successful product.
I'll be adding to my position at some point before the next earnings release. It doesn't look like we've bottomed yet, unless some news comes along that supports the stock. But I'm poised with cash and continue to believe SPYG's future looks bright. If they can show significant revenue growth this quarter -- and deliver strong bottom-line performance ex the SurfWatch sale -- then I think SPYG will go a long way toward regaining credibility on the Street. (I hope so, anyway!) If SPYG's numbers are poor, then we'll be in for a load of trouble, intermediate term and maybe long term.
Have a great weekend--. |
