Yes, the more I thought about it, I realized that it would take quite a bit of effort on Centigram's part to make 5 million in PROFIT from Tru-voice. It would have involved quite a few resources setting up sales, tech support, etc in a relatively unfamiliar area away from their core business, at a time they are trying to cut costs. By selling the rights, they can immediately post 5 million "in the bank." Who knows how much time and effort CGRM would have to invest before they could make that much in profit on their own from Tru-voice? Also, a newer TTS technology may come along that would make Tru-voice obsolete, and perhaps CGRM did not want to devote R&D resources to keeping up to date, etc.
Thanks, Cary, for pointing out that the deal is for about 200,000 shares of LHSPF stock. This makes my argument about the stock price irrelevant - actually a rising price means more money for CGRM. I thought the deal was the other way around - 5 million dollars to be paid in stock. (If the stock price of LHSPF rises, then CGRM gets less shares of stock). |
