Apparently, CGRM did sell off the entire 200,000 shares of LHSPF immediately, banking the quick 5 million dollars and declaring it on the last quarterly report. So that's it for any future benefits. CGRM missed out on the recent double of LHSPF over the past few months. The extra 5 million dollar potential gain would have represented $0.71 cents a share in earnings, pretty significant given that CGRM is expected to earn $0.06 this quarter and $0.65 for the entire 1998 year. CGRM could have met 12 month 1998 earnings estimates just on this stock profit alone!!
I am a little disappointed that CGRM immediately sold off the LHSPF stock. The way I saw it, the TTS technology was a nifty technology, but CGRM had only 2 million in revenue from it, and did not turn much of a profit with it. To make a profit would have involved cranking up sales, marketing, distribution, R & D, etc. CGRM wanted to divest this technology and concentrate on their core voicemail technology. So they sold the technology to L & H, and received stock. If L & H could run with the technology, CGRM would indirectly benefit my having the value of their L & H stock go up.
By selling it, CGRM must have thought (1) The TTS technology would not be very profitable or (2) They thought the LHSPF stock was not worth holding for some reason or (3) They really needed the cash right away, perhaps to offset huge expenses involved with reorganization.
Too bad. It would have done wonders for the earnings side. |
