For those here who avoid reading Yaho ( can't much blame ya.
A good post by Count Bugula
<< Two events need to happen to restore Ampex's valuation:
1. The sale of Data Systems at a price greater than $50 million.
2. The rumored investment by the "Baby Bell."
These events can and should occur, but there are formidable obstacles. For example, there is no satisfactory explanation why the sale of ADS should not have occurred some time ago when storage industry valuations were higher. I am aware that there were legal issues concerning the patent rights, but that in itself should not have held up the sale. It's possible that Mr. Bramson penchant for trying to squeeze to much from the deal may have made the buyer turn sour. Or, the legal negotiations may have simply just dragged on much longer than they should have, while the storage (and stock) market went south. At any rate, my understanding is that there are continuing discussions and that ADS will ultimately be sold for a fair price. Which turns us to the #2 necessary event. Though the usual Ampex channels will certainly not affirm it, management has, according to reasonably good sources, been meeting with a "Baby Bell" for the purpose of taking an equity stake in the Company. This "Baby Bell" is believed to be US West, or, more correctly, Quest Communications. However, there is a problem. And that problem is debt. Management is going to have to clean up the balance sheet before such an equity investment is possible. The decision to write-off MicroNet, I believe, could be part of this process. But the real catalyst will have to be sale of ADS. However, on the plus side, this division has actually stablized recently, and there are more ADS deals in the works to support revenue levels. Further, the critical defense side of the business is expected to grow. And finally, with ADS at least, Mr. Bramson has costs firmly controlled. Therefore, the bottom line is that ADS should still be a strong sale candidate, and the ultimate sale of the division will facilitate event #2. That said, there are some who'd argue that the ADS is Ampex's strong suit, and it is the Internet business that should be disposed of. However, Mr. Bramson is committed to the Internet business, so the issue is moot from a practical standpoint. So, for me, the bottom line is that AXC still has the valuable ADS division and its patent portfolio, which should continue to generate cash flows for some time, and has trimmed down the Internet business to its most valuable components, making the marketing focus much more direct. Even if the ADS sale should be delayed further, management has many financing options to ensure business continuity. From a price-technical standpoint, unfortunately, the price of the stock has remained so low for so long that it will almost require that these two events occur virtually simultaneously, before a sustained rise is possible. The reason for this is that long and battered holders will probably jump at the chance to "escape" from the stock once it begins a real ascent, whereas before, such holders would ride the momentum. >> |
