To: Tom and Neil
Thank you for your thoughtful reply to my July 1 posting on the PRST fundamentals. Let me address each of your replies.
1. Tom- Kodak, Fuji, Agfa, etc. are not known for putting out inferior product. Each of them and others have complete file wrappers on Presstek’s recent requests for re-examination and have resources far beyond the scope of Presstek.
Neil- You state that the company has said that the re-examinations are at the company’s request, technically yes. But it defies logic to believe that this was done in isolation to improve an existing patent. It was done as a defensive measure, and thus far does not appear to be working entirely as numerous claims are being rejected by the Primary Examiner, Stephen R. Funk.
2. Tom- Who knows whether the wash-up problem has been totally resolved. I have heard that the wash-up is taking 6 minutes versus the 1 claimed at DRUPA and in some instances manual wiping is required. Suffice to say that the machine is more complicated than originally envisaged. The fact that the inventory at Presstek is paid up doesn’t bode well for shipments and revenues in the foreseeable future.
Neil- Ron Kendick at Heidelberg would only say no comment when I asked him yesterday about the Presstek June 6th release and the 40/month Q2 1997 target. Delivery schedules have been known to slip in the past for companies in general. What else is the company going to say. I don’t always believe everything that a company says in their public pronouncements. You just have to look at recent examples of companies such as Future Communications, College Bound, Qsound etc. to see that reality doesn’t live up to expectations.
3. Tom- I believe that Rexham are out in the future as Presstek have announced plans to build their own production facilities in New Hampshire and Arizona. That can bring on a whole new set of headaches.
Neil-I am not ignoring anything simply looking beyond 17 year old laser ablation technology to Erasable Cylinders and switchable polymers. Heidelberg’s short run initiative is a niche market. I and others believe and that Heidelberg and others are currently working on the bigger breakthroughs mentioned above. The miss-spelling of the two competitors names is not a Typo as they have been consistently miss-spelled in the last two 10 K’s. To me it is just one other sign of a lack of concentration on detail.
4. Tom- For the Q2 and 3 order backlog #’s see p 12 of the Q2 10Q and p 11 of Q 3’s to see that the backlog was $26.8MM at the end of each of Q2 and 3 and dropped to $16.8MM at year end. What is the # now and why wasn’t it given for the end of Q1 to be consistent with last years disclosure?
Neil- ditto
5. Tom- Remember you need to factor out the advance royalties from Heidelberg as they will be factored out of the sales proceeds once commercial shipments begin.
Neil- No comment
6. Tom- No one runs back to the patent office for a re-examination without being in a defensive posture. Have you read the Re-examination file? You should if you haven’t. All the potential competitors sure have.
Neil- At least two competitors with complete patent files and in house patent attorneys told me this. I am sure you saw the informative posting of yesterday by NAM at 11:54AM on the question of patents.
7. Tom- As I recall from one of the Catalina filings, the management of Catalina is in their 50’s.
Neil- I’m in my mid 40’s. How old are you? The point on the age factor is that usually you find a wide spread in management and the board. Management for succession purposes, and the Board for diversity of backgrounds and skills and experience they bring to the table. This board does not have any strong outside influence on it, and therefore is nothing more than the Howards’ rubber stamp. This should always raise a red flag with investors.
8. Tom- The target market for QM-DI’s as defined on p. 5 of the 1995 10K is " commercial printers, color service bureaus, digital on-demand print shops, and corporate in-house plants."
Neil- I don’t believe that you are correct in saying that printing skills are not needed with the QM-DI. Waterless inks are tricky and due to a lack of a cooling unit, temperature and humidity control in the plant are crucial.
9+10- no comment
11. Tom-What does a PR firm have to do with a new press manufacturer? How many imagesetters have Sakurai sold?
Neil- I wasn’t insinuating that the Adast press was cheap in quality but rather it is found in the lower end of price points. This digital press is a radical departure and may be beyond their manufacturing capabilities and their ability to provide after market support.
12. Both- What else is the company going to say. When sued a company always says their is no merit and they will defend vigorously. Have either of you read either or both of the suits? The Berke suit alleges that the 1995 year end reported earnings should have been 10 cents/share instead of the 18 cents reported. This would have been consistent with the change in treatment retroactively implemented in the 1st quarter’s restatement down from 12 cents to 8 cents. This might have kept some of the momentum boys out of this stock and the ridiculous price levels would likely not have been reached. I repeat the total climate for class action suits has changed and one can not simply dismiss it as frivolous. Once in the courts facts will finally emerge on this bizarre tale.
13. I was not meaning to suggest that Presstek is in play but rather what an informed buyer might be willing to pay. You might recall that an Adam Boothe on June 21 posted reply # 429 in which he stated that Kodak was going to bid for Presstek. This posting along with Boothes real name, Adam Schwartz from Atlanta have found their way to the SEC I understand. Check and see how many postings he has made since.
Neil in response to your observation of the stock not tanking and there being little in the way of large trades, I pass on this observation. There are now 13 Market Makers trading PRST and most trade it to end up flat at the end of the day. On it’s rise to 200 there were only 4 market makers left. A lot of trades happen on Instanet in any event. I communicate with 2 of the market makers and they say that it is difficult to sell 5,000 shares at any point in time. The volume is drying up in this stock and that should not please you bulls.
In conclusion any reasoned analysis of this company will identify too many risks and unknowns at this stage to justify a billion dollar market cap.
Happy 4th. I will be off golfing till Monday. Hope those Walleye are biting. |
