Just saw this posted on Yahoo message boards...
Is nevpacman & Maya the same person. I only comment as I'd like to know who has the real knowledge .. this was a great piece of DD.
Maya's posted Sunday night, nevpacman posted Monday 10am.
Mike
Subj: A $6 target. Could GMGC Create A
Wireless AOL Model
By: nevpacman
Date: Dec 8 1997 10:07 A.M PST
Reply To: Msg. 1 by YahooFinance
A friends view. Rumor has it that some smart money is building a large position (ie recent block trades ?).
Maybe a takeover target ?
I have come up with a $6 valuation of General Magic, here is why:
Basic Data: 26.8 mil O/S, 40 mil cash or $1.50 cash, no debt, tax loss
carry forward $138 mil, market cap $51 mil.
Buying a stock near its cash value is generally a bargain. It is
exceptionally so in case of General Magic if we consider its tremendous
potential --- if its network service Serengeti archives some degree of
success (5% of the mobile market). Secondly, how often we could buy a $1.90
stock with 5 top American CEOs sitting on the board and $165 mil R&D money
already invested?
CEO Markman has assembled an impressive board that included: CEO of Bell
Atlantic Mobile, the largest wireless service provider on the East Coast);
CEO of Cellular One, the AT&T Wireless and AirTouch Corporation joint
venture; CEO of Triton Communications; CEO of Tandem and CEO of Visa USA.
It raises an interesting question: Why are these Telecom Heavy Weights
Sitting on the Board of this Little Unknown Company? The answer perhaps
lies with General Magic's visionary new product code named Serengeti, a
powerful, Internet-based application that will allow people to use one
point (phone) to access all network information and communications
activities (voice mail, email, fax, calendar, address book and stock quotes).
So How Much Should The Magic Be Worth?
A lot more than $1.90 or the current market cap of $51 mil.
Let's see What we are getting for $51 mil?
1. Cash: $40 mil ( as of Sept30) or $1.50
2. R&D invested: $165 mil
3. Tax Loss Carry forward: $139 mil
4. Subscriber Revenue Potential: $540 mil per year ???
5. Intellectual Property: three key communication technologies
1) patented agent technology; 2) integrated communications appls
and 3) Natural user-interface designs.
6. A Collection of Talented People such as developers of Arpanet and
co-designer of Telescript, patent holder of wireless data packet protocols
and ...
7. An intriguingly well-connnectedl board.
Alternatively, a more conservative and simplistic approach yielded a $6
price target based on what's known today:
Cash $40 mil + $14 mil tax loss carry forward (10c on a $1, based on $139
mil loss)
+ technology $1.50 per share (based on $165 mil invested)
+ future $1.50 per share (based on the $540 mil potential revenue)
+ 50c per share for its Handheld Mobile Solutions for vertical markets
+ 50c per share for the people and the board
===== $6 |
