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Technology Stocks : Viador (VIAD) - Enterprise Portal
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To: Walter Morton who wrote (189)6/23/2000 10:55:00 PM
From: Carl R.   of 294
 
I have no doubt that the biggest thing holding back VIAD's stock price right now is concerns over the declining cash balance. Earlier you said that you looked at SQSW, and that they had less cash, but that's not what I see when I look.

SQSW lost $4.4 million last quarter. In their IPO they raised about $33 million in cash, and they had a $6 million in working capital at the end of March. Add the $33 million of new cash, and subtract another $4 million of cash burn and by now they should have about $35 million in working capital. At $4.4 million a quarter, that will last 7.8 quarters.

By comparison VIAD had working capital of $28.2 million, and by now has about $23 million. Using the loss rate in Q1 of $5.2 million, this will last only 4.4 quarters.

On the other hand, for both companies these kind of linear extensions don't make a lot of sense. These aren't e-tailers where the more they sell the more they lose. The marginal profit from additional sales is quite high, and for both companies as they grow their losses will narrow rapidly. Thus neither may need additional cash at all. Wang stated on the tape that he believed their liquidity was adequate for their needs, and that they would be profitable by next year. He also stated that he could raise more money if he needed to, so I think cash fears are overblown in this case.

Carl
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