>"So we're in a very unique position in the marketplace in that we
>provide a true end-to-end solution versus a company having to go out
>to multiple sources to solve one problem," Baxter said.
Almost every Internet service provider offers complete solutions. Almost all also offer web page design and hosting. Almost all internet service providers offer security backup services. And i don't mean all big ISPs. I mean even small ISPs offer these services. I really would like someone to explain me what is special about that.
>But Icon has incurred net losses and negative cash flow from
>operations since adopting the end-to-end Internet solutions strategy
>in 1995, and the firm expects to continue to operate at a loss and
>experience negative cash flow at least through 1998.
Key word "net loss, negative cash flow". Watch out for insider selling.
The future? "the firm expects to continue to operate at a loss and
experience negative cash flow AT LEAST through 1998"
>Icon recently announced a deal with IBM Global Services, a unit of
>International Business Machines Corp. (IBM), that allows Icon CMT to
>expand its network to 600 dial-up sites accessible to 92% of the U.S.
>population.
Also here nothing special. Many very small Internet service providers use other networks to reach customers in other cities. What is special about that?
This only means that with all the losses they made they have no money to build and operate their own network. So they have to pay IBM for use of their network.
I guess many customers will say "Why pay a reseller and not go directly to IBM network?".
>The company's stock (ICMT), which drew little interest at $10 when it
>debuted last month, has been surging of late. On Friday, Icon's stock
>finished trading up $1.4375, or 9.7%, at $16.25; earlier, it
>established a new 52-week high of $17.625. Over the last few days,
>Icon unveiled two new Internet products and announced plans to
>upgrade and expand its network operations center and hosting
>facility in an effort to avoid malfunctions.
I really must say that it is very good that they will try to avoid malfunctions in the future.
From the last SEC filing:
To date, the Company has incurred negative cash flow from operations and substantial and increasing net losses. Net cash used in operations for the years ended December 31, 1995 and 1996 and the nine months ended September 30, 1996 and 1997 was $1.3 million, $5.0 million, $4.4 million and $8.6 million, respectively. Losses from operations for the years ended December 31, 1995 and 1996 and the nine months ended September 30, 1996 and 1997 were $0.6 million, $8.3 million, $5.8 million and $8.5 million, respectively. The Company had an accumulated deficit at September 30, 1997 of $17.2 million. The Company expects to continue to incur significant losses at least through 1998.
The report of independent accountants on the Financial Statements contains an explanatory paragraph stating that the Financial Statements have been prepared assuming that the Company will continue as a going concern while expressing substantial doubt about the Company's ability to do so.
The Company's present ability to continue as a going concern is dependent on its ability to generate sufficient cash flow to meet its obligations as they become due.
The Company's significant operating losses, expected additional losses and increasing cash and working capital requirements (see Note 2 to the Financial Statements) raise substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that the Company will be successful in attracting new customers or retaining current customers or continue to increase revenues or generate profits. There can be no assurance that the Company will ever achieve profitability. Furthermore, the Company will rely to a great extent on resellers to market certain of its Internet access services. A substantial portion of such services is currently resold by a limited number of such resellers. There can be no assurance that any such resellers will continue to actively market the Company's services. The Company's prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. To address these risks, the Company must, among other things, respond to competitive developments, continue to attract, retain and motivate qualified persons and continue to upgrade its technologies and commercialize services and products incorporating such technologies. There can be no assurance that the Company will be successful in addressing such risks.
What happens if they continue with negative cash flow and can't pay the many fees as they become due? What happens if they can't pay the fees for the use of IBM network?
How much will the shares be worth when the company is forced to shut down? |
