The Bad Things In The 10-Q
I have traded GMGC for the past thirteen months, almost without exception long. During that time I found three major short-term opportunities based on momentum and promised-news to profit from my investment. I increased my investment yesterday before reading the 10-Q with the expectation of a short-term gain based on price and volume momentum, institutional investment, and a belief that some results from IBM will be announced soon.
I posted portions of the 10-Q last night that I thought had significant new information. I don't want to appear to be hyping the stock (after adding shares), so I am also posting here all of the bad things I found in the 10-Q. (I found little new good news other than the success of the expense reduction program, a mixed blessing for a firm that should be growing, and the expansion of the NOC.)
IBM - The June 22 "memorandum of understanding" has now been replaced by an "agreement" that was signed in July. I would expect that the 10-Q would have to include mention of equity or license fees. Since there was no mention, I conclude that no significant money is being paid by IBM to GMGC now or during the balance of 2000. Near the end of the 10-Q is a list of customers from whom GMGC expects near-term revenue. IBM is not in the list. This agreement seems to provide space-on-the-shelf at the IBM store but little more. Investors should look for near-term results and further specific mention by IBM to determine the potential for the deal.
Qwest - $8.2 million is still owed to Qwest by April 2001 under a take-or-pay contract for NOC communications needs. GMGC is trying to break the contract but may not be successful.
Master Licensees - $2.8 million is owed to two master licensees as refunds (or other) as a result of the demise of the myTalk type services.
Qwest & Master Licensees - The obligations to these parties is not recognized in the most conservative manner on the financial statements. Restatement of these obligations would cause an unfavorable one-time adjustment.
Research - Research expenditures were cut by 2/3 from Q1 1999 ($3.1 million) to Q1 2000 ($1.0 million). I conclude that GMGC has nearly abandoned development of proprietary, patentable technology and that many of the senior engineers and scientists are gone.
Competitors - In eighteen months we have come from a time when there was almost no market for voice application services to a time when the market "intensively competitive." The list of potential competitors is a rapidly growing one.
Now, hcirteg and Seconds, you can reinforce my opinions by posting ad hominem attacks (parodies, misspellings of my name, etc.) or your own analysis of the 10-Q. Your conduct is impolite and makes this forum uncomfortable not only for me but the other readers as well. Perhaps you should post your identities if you feel so strongly. |
