Stan:
As a new Member of S.I. they limit my responses to 5 in a 12 hour period. In the interest of being able to post as much as possible, I will combine answers to a number of questions posed by others.
The following are questions and answers previously asked and answered over on Motley Fool. Many of them dupicate questions posed her recently.
From WS Condor
Consider these points of interest.....................
1) A bunch of money managers have been sitting on the sidelines, just waiting to see the MatriDigm Year 2000 date conversion software. You can't blame anyone for waiting in this type of market, but what happens when MatriDigm introduces/exhibits their automated conversion software. The fence sitters immediately become buyers.......and size buyers.
1a) Another Year 2000 service provider announces the first BIG contract of $20MM or greater.
Then they start coming in on a regular basis. NOW the problem becomes very real.
2) What happens when at about the same time (Q3) Zitel announces a major OEM for their CASD products, and starts to show significant revenue progress in CASD sales.
3) Add to that the introduction of their CASD III twin chip-set in Q4,96 or Q1,97. With price/performance benchmarks light years ahead of the competion, and an experienced sales organization consisting of VAS ad VAR's in place.
4) Then MatriDigm announces several important revenue producing beta customers. Recognizable names and hard contracts. By Q4 the ramp to process significant (The Big "B") volume is in full swing.
5) With IBM's big commitment to storage, new generation RAMAC will add additional revenue and earnings kickers by Q3 and Q4.
6) Now, to top it all off, the company announces in earnest a real live share repurchase of $5MM worth of stock (357,000 shares at 14). 5% of the outstanding.
7) Perhaps the most important single event since we all started covering Zitel/MatriDigm has been the Kevin Schick visit to the company, and his strong endorsement of their unique technology. Kevin's influence should not be under-estimated! There are alot of large companies and government agencies that pay Gartner Group big bucks for this type of advise. Who has the best technology? Who should we be looking at when we form our Y2K consortium?
The answer, of course, is MatriDigm. Coming from a Kevin Schick that endorsement means everything.
8) Kevin Schick is one of Gartner's most senior analysts and a director of IT/Technology. His specialty is Y2K issues. He is one of the most sought after advisors and speakers on the subject. That information is easy to verify by placing a phone to Gartner Group and simply asking about Schick's background and title. (He is now acting as a consultant to Gartner Group for Y2K issues)
To refer to Kevin metaphorically as "a guru" isn't too far off. ( I do NOT believe that he wears a turban, so I guess you got me on a technicality.)
The information that I posted regarding Schick's endorsement of MatriDigm's technology came first hand; as in conversations with Kevin. If you would like to pay Gartner Group thirty to three hundred thousand dollars per year (depending on the level of service you require) you too can have a conversation with Kevin Schick on the subject.
The reason that you don't see anything in print (YET), is that 1) Gartner typically does not do company specific research and 2) Kevin will wait until final tweaks in the program are complete before writing officially. Kevin's endorsements, which are much more important than writing a research brief, come in the form of introductions to potential business partners and IS managers. As I stated in a previous post, Schick believes that the big winners in Y2K business will be those successful in forming consortiums to handle all aspects of the business. The ideal power consortium would be headed up by one of the majors (IBM, EDS) and consist of key niche players. Kevin believes that MatriDigm's technology has a place at the core of one or more of those consortiums.
Everything that I have posted, can be readily verified by doing a little investigative work of your own.
9) Does anyone know what RGP Cobal language is all about? Thought you would never ask. Its a strange little version of Cobal which is applicable to mid-range computer systems. RGP stands for Report Generation Program. There are approximately 30 billion lines of code out there. MatriDigm is tweeking their program to handle RGP as well. This is an area that could really be lucrative for MatriDigm, as the margin for the smaller applications will be significantly better.
10) On the subject of BRCP's "bargain Basement" buy-in:
Sure, Esping got 7% of Matridigm at fire-sale price. But, did not the private investors of Netscape get fire-sale bargain? I think they got their shares at 44 cents a share mere 1 year before the IPO. They now have what, 10,000%+ gain? Now, a short time ago, if you valued Netscape at the purchase price of the early investors who were able to participate in Netscape because of special relationships, you would get about 1/100th of the market-valuation today of Netscape. Now, these were just venture-capitalists, not major players like Andreesen.
I mean, Esping is THE Chairman of the Board at Matridigm today. He brings to the table a whole sales/marketing arm for the company. He wheels and deals for Matridigm at IBM, AT&T, and who knows what. So, he gets to participate at a lower price. So what? I think Zitel got 37.5% of Matridigm for couple of million dollars 2 years ago. Why? It's because Zitel provided some key technological aid. I'll give you another example. CRWF invested 2 million dollars in TLSP about 6 months ago. It's now worth about 120 million dollars. Why? It's because CRWF made TLSP happen.
It is ridiculous to talk of valuation of a private company that is about to start on the purchase price of a major insider. It is simple lunacy... Chairman of the Board who is contributing majorly has a right to some form of stock options...
This is a reprint of a message posted by Casey (CarrKeith) over at the Motley Fool.
I believe he has some very good points which may answer some of the questions posed here on S.I.
There are some points that I feel warrant mention regarding the subject of an investment in Zitel/Matridigm, which for convenience I'll refer to as ZM. I don't believe that some of the points that I want to make have been posted to this point.
My opinions are derived from The Stewart Report, the Emerald Research Report, the Zitel conference call, the Matridigm patent application, my previous experience as a Vice President of the IS department of a large firm from 1989 to 1993, which currently is facing the Y2k problem, the Nov 15th IDC Research report and last but far from least, all of the postings on this and other threads discussing Zitel and other Y2k stocks.
The premise of the following is that I believe that Matridigm has a red -hot technology. The technical, commercial and marketing brains behind ZM are more than impressive. Anyone who doubts the technology should go to the www.Matridigmusa.com website and print out the Technologies and Services document, then find a knowledgeable Y2k individual to explain it. This is what Kevin Schick called "the hottest technology I've ever seen".
Ignoring the Y2k problem, this technology is impressive for its outsourcing potential for legacy code maintenance; the original incentive for Franklin Chiang's research. Outsourcing the development and maintenance of IS systems is a huge and growing industry. Software maintenance is a problem for all IS departments, since the best programmers prefer to author their own code and not end up having to maintain and debug the (always inferior) code done by others. The conundrum is that effective maintenance requires the best programmers.
Matridigm's technology is built on automated software code conversion `factories'. They can be scaled to match any demand. As David Stewart reported, that's important. Production of converted code, like industry demand itself, will ramp to higher and higher levels as the mandatory deadline approaches. I am also convinced, as Matridigm claims, that they also have the most cost effective solution as well as being a solution that by its automated nature is a pleasant alternative to the drudgery and high cost of software-assisted manual conversion.
Unlike the ZM solution, `body shops', i.e. Y2k consulting firms and IS departments that want to attack the conversion projects themselves, are labor reliant for growth. The dilemma that they will face is not only that as the clock approaches Jan 1, 2000, the alarmed need for date change assistance compresses, but that programmers needed for the work will be harder to find.
Firstly, I don't believe that there could be a less challenging and more boring job for a programmer than repetitively fixing date code. Secondly, what programmer wants to get involved in something which will add nothing to his/her CV, and which will come to a dead stop in about three years. Someone is going to have to throw big $ at programmers to prevent them from jumping ship before D-Day. Thirdly, when one looks at the size of the problem and the potential deployment of the IS resources onto this mandatory but non-value added project, and considers that most IS shops would then have to partly or completely shut down their normal IS plans which heretofore were focused on moving their firms forward, you can imagine how thrilled the CEO's and core business executives (as well as the IS VPs) will be to have to fork out large chunks of their companies' cash flow to fund this asinine effort. I find the recent IDC research report faulty when it somewhat naively infers that most companies have their Y2k conversion plans in place and things are less serious than reported elsewhere previously.
I don't think there would be an IS manager worth his salt who wouldn't jump at the chance of being able to ship their `dirty laundry' to Matridigm, and have it returned within a week or two, all squeaky clean. And the real beauty of Matridigm's technology, is that converted code can co-exist with non-converted code. This is paramount. It means that huge applications can be sent out and converted piecemeal. The IS department doesn't have to miss a step. Ongoing development and maintenance can continue uninterrupted. Firms that opt for a Matridigm solution can keep on pursuing their `forward year plans'. Those who opt a do it yourself approach would have to justify a huge millennium problem budget lasting for many months if not years - an unpleasant job and a damned hard sell to boot.
Some posts have wondered if maybe a Microsoft, EDS or IBM or some such will come up with a competi |
