From RB.
I find a disparity between boasting of VC connections, but complaining about shortness of funds -- PFNT is competing with the big boys in research, and will need dough to do that. And they just hired a sales department for the equipment side -- ONE person! Sheesh.
Still this is encouraging, and explains to me the most clearly what PFNT is really trying to do.
- Charles
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mbel
Reply To: None Wednesday, 7 Jun 2000 at 12:51 AM EDT
Post # of 1602
I talked to Kathy Putnam, VP and CFO of PFNT, last Friday. Here are the highlights:
PFNT cannot upgrade their network to a two way network. They are concentrating on the "cheap beep" which is still used extensively. It's the least expensive and most efficient form of messaging and one way signaling. However, on the equipment side, all their products work on one way AND two way networks.
In the paging and voicemail space, their competitors include Glenayre and Motorola. On the ISP, CLEC and voice side their competition includes Lucent and Cisco. PFNT's strength is in their data or short burst traffic packet switches that complement Lucent's or Cisco's voice or circuit switches. PFNT has an edge in price, size, modularity and single number routing. Their products also handle voice over IP.
Recently, they have hired their first full time salesperson for the equipment side. He has over 20 years experience with telco equipment companies which recently includes working for a private telco equipment company and Glenayre.
PFNT's initial focus will be on selling to paging and messaging companies as well as CLECs and ISPs globally. The iTerminal will be sold to companies selling or using paging and voicemail.
The company still has 16.9 million warrants outstanding. The exercise price is $1.50 and they are callable at $10. The warrants have an expiration date of 10 years and the majority were issued in 1997-1998.
PNC's venture capital arm took a stake in the company in a 1995 private round of financing and also own preferred shares issued in secondary offerings in 1997 and 1998.
The warrants can present dilution and selling pressure so the company is considering a cashless exercise where the warrant holders would not pay anything to convert their warrants to common shares but instead would be issued the difference in shares.
Kathy sounds very optimistic about the company's prospects but when asked what she thought their biggest hurdle was she said that she wished they had bigger credit facilities. I have a feeling that will change as their products gain acceptance around the world.
Everything PFNT has developed will work with the competition's switches to improve their data performance. PFNT has quality engineering and they own a network to develop their products on. None of the competition owns a network! They also have the backing of major VCs and a paging network that covers half of the US which resells to all the major carriers except WebLink. They have a solid staff and a senior salesperson with industry contacts. Their products are modular and new products are being developed for the VoIP space which is a growing market.
PFNT is not a run-of-the-mill penny stock. This is a solid company that fell on hard times and is actually held by a few special situation mutual funds. How many penny stocks are backed by VC and are held by mutual funds? Not many.
With the explosion of wireless data and the advent of the wireless Internet, wireless data products and network equipment will be in increasing demand as paging networks carry more and more Internet content.
Right now we just saw a run up of top tier stocks. It seems as though the top tier stocks get run up first and as they start getting pricey the second tier starts to get some interest and then finally the microcaps and penny stocks move. I think we may be in for another rate hike later this month so we may see some new lows developing. Last week may have been a relief rally or a sucker's rally. Who knows. Either way, PFNT will probably have a couple of quarters to go to show some meaningful revenues before we see any serious movement. I wouldn't be surprised to see $2 before election time, but I really think the stock will take a little while before we see anything major. But, I hope I'm wrong and it blasts off next week!!! lol
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