CDRD (CD Radio) Message Board

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Technology Stocks : CDRD (CD Radio)

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To: Fred Puppet who wrote (123)	6/13/1997 1:11:00 PM
From: david smith	of 904

Fred: As you may know, there is something of a war going on now between the shorts and longs over this stock. There is a really big short position that people started to build at 11 to 14, and you might see some evidence of that on this board. I certainly wish no one ill, but it seems to me that the hyperbole on both sides here reflects more the big bets being made than a sound investment analysis. For example, the claims about the licence being in jeapordy or more licences being granted is terribly misinformed. CDRD will recieve the licence and no others will be granted. Fot the FCC to act otherwise would be unprecedented. Second, to quote the disclaimers that every company must put into its financial reports as evidence of problems is as misleading as quoting there press releases as evidence of good prospects. I think that the market is telling us here that CDRD is one of the better "story" stocks to come along in a while. Evidence of that is that big positions have been taken by reputable investors such as principles of Robertson Stephens. The only competitor/partner of CDRD is backed by Hughes. I would also point out that if CDRD raises 500 million to create sattelite capabilities, the company would then be worth about 500 million more so the dilution that is required for raising that money isn't what some people are suggesting. Please also consider that if someone is willing to give this company 500 million for sattelites, that someone probably has taken a hard look at what they are investing in. My experience is that people with 500 million to loan\invest are more often intelligent than capricious. On the other hand, I agree with the thrust of your comments that this venture is very risky. I think that the strongest point you make is that so many things could go wrong between now and the time when they predict beginning operations. So the risk is real and I would not bet the house here. In my opinion howevere, there is a real chance that this stock could go way up on the basis of several announcements in the next while. One is financing for the sattelite. Another is an agreement with some auto company to install at source. On the downside I can't see it tanking too far for several years because it will take that long to demonstrate that the idea is seriously flawed. So my investment decision here is long but it is not without risk.

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