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Technology Stocks : Fonix:Voice Recognition Product (FONX)
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To: john harris who wrote (1530)12/31/1997 10:37:00 AM
From: Mark Cox  Read Replies (1) of 3347
 
John, My elaboration of "Fundamentals".

Fundamentals applies to any numbers, good or bad, which provide a quantitative framework within which investors may assess the condition of thier company.

Financial strength is a description of a company with certain characteristics in its balance sheet and P&L. Fundamentals are not dependant on a history of numbers from a company. A history provides a sense of trends and volatility which add to the confidence with which an investor can make her assesments.

I certainly would not describe the situation with fonix as one of financial strength or even that there are real fundamentals currently. In fact fonix is on the cusp of changing from developmental, cash burning, stock issuing ( for "hoped for future cash flows", not hyped: very few distinguish the difference precisely) to an intellectual property company earning money from the sale and protection of its intellectual, in this case speech recognition, assets.

This process is signalled clearly by the arrival of Siemens. "Fundamentals" arrive with the announcement of License Fees and we know the company are trying to recognise these in the 4th Q so its today that matters. If this does not occur it will be unsurprising given the real difficulties of making things happen in the real world to timetables. It will disappoint but surely, not so much that it should stimulate a stream of anti management invective.

I have confidence that the possibility that there will be increasing cash flows associated with the licensing of fonix proprietary technologies, is strong enough and that the technology is remarkable enough that there may come a time when the fundamentals have both strength and a good history.

Hope this clarifies.

Parx
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