What appears below was taken from an article from the San
Diego Union-Tribune 3 SEP 1995. It is not the complete
article. It is provided for info and to show what new
management has to over come and still trying to do.
"Old promises will finally come true, inventor says"
by Don Bauder
Inventors dream. Investors scream.
It's an old story: An emerging company headed by an
inventor comes up with a promising product--along with
extremely bold statements about upcoming earnings.
Consider Poway's Norris Communications. Until recently,
its chief executive was inventor Elwood (Woody) Norris, an
electronics/acoustical engineer and an ebullient optimist.
The company he founded, which went public in 1988 on the
raucous Vancouver Stock Exchange, has had a number of
products--such as a miniature in-the-ear radio--and
disappointments.
The company is now pushing a hand-held digital voice
recorder called Flashback, which could replace tape
recording devices. It's now touted for use in voice
dictation, but the technology may have future uses in
pagers, answering machines, cellular phones and cameras,
among other things, says Robert Putnam, senior
vice-president.
However, investors are wary. In April (1995), Elwood
Norris told securities analysts in New York that, with
Flashback sales soaring, Norris Communications would ring
up a profit in its fiscal first quarter ended June 30,
1995. Do any of you remember that press release???
It didn't. It lost 10 cents a share,.....
Flashback sales were initially disappointing because "the
retailer bought, but the user didn't," Norris says.
Retailers needed better collateral support, such as sales
materials. Now they have them, he says.
What's been most damaging for Norris stock is the
persistent rumor that Flashback products have suffered a
big return rate. Remember-This was published in September
1995.
"Rumors of high rates of returns on Flashback hit the
market, but there has been no announcement from the
company, no clarification," says Bud Leedom of San Diego
Stock Report.
"Our returns were 15 to 18 percent from January through
March, I will confess that," says Elwood Norris. "Now
they are under 3 percent."
Now, the product is selling like hotcakes, Norris says.
And old promises will finally come true, he asserts.
"The projection made for the quarter past that we did not
hit will happen this quarter or the next quarter after
that," he says. "By fiscal year-end, in March, we will
easily have shipped 100,000 units. This fiscal year will
be profitable."
Analysts remain skeptical of rosy pronouncements. "The
company has always missed sales and earnings targets the
last two years," says David N. Allen of Torrey Pines
Securities.
Part 1 of
2
Auerbach Pollak & Richardson of Stamford, Conn is the
investment banker for Norris. The stock has been weak
"because of the credibility issue," says Stuart Barich of
Auerbach. "When management makes an announcement, the
market will not believe it. He (Norris) hasn't been right
yet, so why believe him?"
But this time, the company has a great product, Barich
says. "They are wiping the competition off the shelf," he
says. Once that's proven to Wall Street, "the stock will
pop up, I believe. Remember, this article is from Sep
1995.
Auerbach analyst William A. Relyea looks at the long
pull: Norris's fully digital technology, he says, "has
unique advantages in the recording of voice, music, images
and data" because of the company's developments in the use
of flash memory.
Relyea sees the Co losing .15 cents in FY 95 (current
year)
and earning 40 cents a share in FY 67. The stock can
move up substantially, he says.
On Aug 16, the company announced that Bob Root would be
president and chief executive. Norris would become
chairman and chief technology officer, focusing on product
development. "The hiring of Mr. Root was a condition of
them hiring us, from our end, "Barich says. And I gave
Woody credit for this at the time.
"The positive for the stock is the appointment of a new
president, plus patents relating to Flashback, "says
Allen.
But the new management still has to clarify the status of
Flashback - the return rate and the retail market
acceptance--Leedom says. Until it does so, "I would stay
completely away from Norris stock," he says.
Will, that the end of the article.
How correct was Woody on his projections???? How about
100,000 units to be shipped by FY year-end March. It is
MHO that the company has not produces 100,000 units much
less shipped that amount.
The new management has done a lot for the company and
still needs to do more. IMHO, Woody dug a deep hole and
put the company in it. Now Mr. Root and his team has to
climb out of that hole. It has been very slow, but I
believe we have the right person (Mr. Root) to do the job.
I have complained just as loud as the the rest of you
about the poor performance of the stock price and no
visible progress in licence agreements. I believe I have
stated before, that VoiceLink/SoundLink was the key to
Flashback. Without the VoiceLink/SoundLink, Flashback is
just an expensive memo taker and I do not believe you can
get around that fact.
Once the company starts producing and selling the
VoiceLink/SoundLink you will see an increase in sales of
Flashback and soon thereafter (two to three quarters) a
profit. The company has to prove this to the Street,
since Woody over hyped the company's sales and profits.
--
Jim - Running on NavStar
Part 2 of 2 |
