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Technology Stocks : General Magic
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To: Ronald C. Vinyard who wrote (9082)9/15/2000 7:06:39 AM
From: dgurgel  Read Replies (1) of 10081
 
If they get it done at $6.00 or better it will be OK. Losses for 2001 should be somewhat less than $45 million, the max size of the deal. Markman predicts profitability sometime in 2002.

The Series H guys got in at $5.27 in April and GM got in a year ago at $1.68. The only thing that bothers me is the quality of the investment bank. The bank's chief analyst on their web site is predicting a fall of the NASDAQ to 2800 something and a two to three year bear market. He also has issued a long list of short recommendations (not including GMGC). Hiring Chicken Little to sell an investment in the future seems a bit unwise.

One other disappointment is that the IBM deal is definitely not an Onstar-type deal with equity and engineering up front. A few of us hoped for IBM equity participation, but GMGC certainly never hinted at that.

The market's reaction will be interesting. I would think institutions will have to go to the sidelines since they can probably get some discount on the new issue. The situation will take weeks to play out. A really solid news release on a paying customer (not a strategic partner) would clear the decks for a resumption of upside action. If Markman foresees such an announcement, then the timing will prove to be excellent. (He may indeed foresee that since this offering seems to be out there about a month before it had to be.)
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