[Crash course on CUBE, techies stay away]
Billyjeanne:
I'm not the best technical person to provide you a run down on the company, but seeing that our techie engineer types are too self-absorbed to help you out, I'll do my best. I'm likely to make more than a few mistakes so I'm sure the techies will be sure to correct me. Before you invest in any stock, however, you should read the company's 10-K, CUBE's document can be accessed below:
edgar-online.com
The basis of investing in CUBE is the transformation that television and other visual media will experience when it transitions from analog video signal transmission to digital. With digital transmission, high definition television (HDTV) will become available. Televised sporting and cultural events will look just like you were watching them live in the stadium rather than on TV. Since it comes via a digital signal, you will be able to send more data across at faster speeds, so instead of 80 channels, cable providers will be able to provide 200 or 300 channels.
Instead of watching old scratchy video tapes, movies will come on shiny disks called DVD (Digital video disks), which will provide laser sharp pictures and digital quality sound. DVD's will look like CD's in shape and size, but be able to carry gigabytes of information, not just enough to fit Jurrasic Park, but also maybe a video game based on the movie, a copy of the original book by Michael Crichton, out-takes from the movie, the MTV videos with songs from the movie, and a directors revised cut of the movie with an alternate ending. Additionally, if there's a favorite scene, you like to see, you will be able to get it at the push of a button to watch it and not have to play rewind hide and seek. If your mother comes from the Old Country, you can watch the movie and play it in one of 16 different audio language tracks. DVD's will not only replace Video tapes, but also CD-Rom's. Software makers will be able to store incredible amounts of data of all types on future DVD's. You will be able to fit the contents of a small library on one tiny disk.
MPEG is an acronym for Motion Pictures Experts Group and is just the set of protocols or standardized data format that the electronics industry has agreed upon to which the electronics industry has agreed to store and transmit this new digital audio and video data. Video images are transferred into MPEG format where they can be stored or transmitted over cable or wireless means. This is where CUBE comes to the rescue. CUBE makes decoder chips that read MPEG data and convert it into sound and pictures. These would be used in DVD players, HDTV, second generation cable boxes and DBS (Direct TV dish TV) systems. CUBE also makes encoder chips, which take pictures and convert them into MPEG. These will be used in computers, video-conferencing, next generation video camcorders and on recordable DVD's. Say you want to watch the Super Bowl again, you'll be able to record the game on your DVD and then play back any specific play and watch it from any one of the 16 different camera angles you have recorded.
MPEG-1 is the old standardized format that was agreed to about 7 years ago. Based on old technology, MPEG-1 is limited in how much audio and visual data that can be stored, probably no more than 40 minutes worth. The only real market that MPEG-1 has generated so far are Video CDs (VCDs), which is the same thing as a VCR tape, except the data is stored on a CD. The basic market for VCDs has been in China where they are used for karoke songs and pornography. This used to be a huge, profitable market for CUBE chips except that recently a competitor, ESS Technology came in and stole virtually the entire market away from CUBE.
MPEG-2 are a newer set of standards that lets you get more data on a disk and is required to play DVDs. One major problem has been that the major studios, notably Paramount, Fox and Disney don't want to release any of their movies on DVD because they are afraid people will pirate it and then just put it on the Internet so people won't buy DVDs. The other problem has been competition. In addition to ESS Tech, Oak Technology, Zoran, SGS-Thompson, not to mention the big Japanese and Korean firms (Toshiba, Samsung, Sony) will all be capable of producing decoder encoder chips within the next couple of years. CUBE has the technology leadership in the market, but has not been able to translate that into marketing prowess and financial success. CUBE stock has been as high as $70 in the past. The market potential is as huge as anything, but whether or not CUBE will be able to capture any of it and make any money doing it is an open issue.
Good Luck
Grant |
