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Technology Stocks : ADSOD-Adaptive solutions

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To: tonyt who wrote (303)	10/31/1997 1:07:00 PM
From: David Barton	Read Replies (1) of 477

I see this as a strategic shortcut to getting out of enabling components and into real products. The downside is that Kodak will peel off a lot of margin and is renowned for being nasty and underhanded to deal with, especially with partners. This is not a true acquisition from what I see because Kodak is still involved, which explains the very low price. Kodak's view point is that they still make the money from service and support but don't have to provide R&D or initial sales. Ultra low risk for Kodak with no downside since they decided this isn't their core business. Good for ADSO too if ADSO margins justify the R&D and Kodak doesn't drop the ball on support and service, which they are famous for doing. All in all, I think it's a wise move but ADSO would do well to remove Kodak ASAP. If the revenue puts ADSO in the black with room to spare, it's a springboard to a truly autonomous business and builds some brand currency in the mean time. If Meub understands all this and executes accordingly, it's a brilliant move. Otherwise it's niave. I think the former. -David

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