More info on Lernout and Hauspie (LHSPF):
I dug up a bit more info on LHSPF, since we are all now minority shareholders! Total market cap is about 400 million, so CGRM's stake is a little over 1%. They are involved in advanced speech technologies, including voice recognition, text to speech, etc.
They have had explosive growth rates in sales. For 1994, revenues were 2.3 million, 7.7 mil for 1995, 31 mil for 1996, and 16.5 million for first quarter 1997. Annual growth rate of 456% over last 3 years.
I don't know what percentage of revenue is from text to speech (TTS). If Tru-voice becomes their flagship product, then it sounds like a steal at only 5 million. After all, LHSPF made 16.5 million last quarter. If TTS represents 30% of that, then revenues match purchase price after only one quarter! By some accounts, CGRM's Tru-voice was the cream of the TTS crop.
LHSPF's balance sheet would make any value investor cringe. The price/book is 25, and price to sales is 10 (compare to less than 1.0 for CGRM). Also, the debt/equity is 2.35. Plus the stock is at a 52 week high.
So it seems CGRM is selling a highly regarded technology for a cheap price. Plus, it is getting paid in a stock that is richly overvalued and trading at a 52 week high (so much for the "buy low" philosophy). Granted, if LHSPF continues to put up triple digit gains in revenue, then this stock may continue to do well in the long run.
Obviously, this is just an outsider's viewpoint. Management presumably felt that they brokered a very good deal for CGRM.
What does everyone else think? |
