There was an article on General Magic in a newsletter that came out this morning. I know a bit about the company -- I used to work with the folks that General Magic bought in late July (Conterra) and I have dabbled in the company's Tabriz stuff.
This isn't a purchase I'd make. The shares have declined from over $18 to less than $4 in the last 18 or so months. More importantly to me is the issue that the company doesn't seem to be managing its spending particularly well -- in the latest quarter's results I understood the uptick in R&D given the shift to a focus on the Web (which has been going on for some time now -- it was called out in the first quarter's notes from management also) but the uptick in SG&A scares me. Even more scary is the fact that Tabriz still isn't available on a high volume platform (e.g., Windows 3.1/95, Windows NT) and won't be until "sometime in the fall". To me, I don't see how the company can even begin to generate revenue in mid-1997.
I think the purchase of Conterra is a long-term win -- they got some very smart people who know an awful lot about Windows and communications. So the spending on this wasn't necessarily bad.
Could there be a buy-out? Sure. Marc Porat, the head of GM, is a smart guy way out there on the technology curve -- let's face it, if he weren't GM would have died by now after going after proprietary networks and PDA's on those networks. But I don't think that I'd bet on it at this point -- 'cause if it doesn't happen quickly, you might be sitting on dead money for a while.
Mark D. Campbell
P.S. The newsletter with many of the facts noted in this article is called "Synthesis" and is available for free by sending an e-mail to "Synthesis@msn.com" with "subscribe" in the subject and your name and e-mail address in the body of the message. Warning: the newsletter focuses on the computer industry, you need Adobe Acrobat to read it, it comes to you once a week (on Sunday's), and it's about 200K per issue (lots of charts and graphics along with text). Other warning: I write for this thing too -- so I'm not objective. |
