From a man whose opinion and technical savvy I have the utmost respect for, Zeev Hed. The following is an objective and realistic assessment to bear in mind:
Message 4377489
From: +Zeev Hed
Friday, May 8 1998 8:36AM ET
Reply # of 2231
Dr Vee I am not saying you were right or wrong, but for a novice (as you claim to be) to come and
say "sell" without reasoning, is not very credible.
Here are few argument you could have made. A system cost $7 MM (I have grave doubts on this
number, since a system must contain at least 3 planes and possibly a fourth in reserve, each with a
very sophisticated electronic com suite) but the company has only $2 MM on hand (at least
according o one poster here). How do they get their first system in the air? Furthermore, since these
systems have a limited radius of coverage (what is it anyway? 150 to 300 km?), many such system
would be required to cover a country likeBrazil.
Finally everyone talk about a capacity of 250,000 subscriber each paying $30/month, but people
forget that for months, maybe years the systems will work well under capacity. How long does it
take to enlist 250,000 customers in a country like Brazil.
Last, how many people in Brazil can afford to pay $30/month for telephone service and where are
these people?
Now Dr. Vee, you can start and make a case that this stock price has in it anticipations that are not
rational. The lack of money will have to be answered one way or another. Either some big partners
will have to be asked to foot the deployment bill (and they will want return on their money, thus
much less return to PLFM). This takes time to negotiate. You can also state that before the system
is profitable it will operate in the red for a period of time and where will the money come for that
(more dilution?). These are arguments that can now be taken by the thread, analyzed, model the
growth rate, determine the deployment rate feasible and the cash required, and then come up with a
model of future earning that could determine if, a.) the company has a good chance (or not) to
survive, b.) make good money, and c.) whether any of this money will accrue to current share
holder.
Let the deliberations begin.
Zeev |
