SRCM STRONG SELL Rec - Research Report
After originally buying this stock long, based on the DJ news story about rumors of a MSFT/YHOO/AOL bidding war to buyout this company, I conducted considerable DD. What I found was so alarming I sold my long position and took a short position buying puts.
My research indicated this company;
~ Has patents covering dated technology that IMO are cover worthless to YHOO/MSFT/AOL/ or any others, and therefore I believe there is absolutely no chance of a buyout except in the event of a liquidation;
~ Had "Insiders" who sold $20 million dollars of stock on May 19-20.
~ Has never made a profit, but racked up approximately 100 million dollars of loss carry forwards since its inception;
~ Has huge debts outstanding, causing significant dilution via associated warrants and options issued to the lenders;
~ Has huge debt service that will cripple the company and likely force them into bankruptcy unless they are able to significantly increase revenue;
~ Has no significant product or service that I believe will produce enough revenue to ever make them profitable or allow them to service their debt;
~ Has evidence of management hyping or misrepresenting the results of their operations;
The only thing I found this company to have done successfully was sell stock and borrow money. I found it **disturbing** that this ridiculous "Buyout Rumor" was circulated just at a time that would allow the company to exercise their warrants by having the stock trade over $20 for 20 consecutive trading days. I also found it disturbing that SRCM management is paid large bonuses based on successfully increasing the price of SRCM stock.
I believe desire to inflate the stock price for a warrant exercise, and management bonuses may be the motive behind the rumors of a buyout.
I suggest shorting this stock or buying long term puts. I will be aggressively trading the stock short or with puts on all rallies. I see good potential for the stock to go below $5 due to no apparent, realistic strategy that would allow the company to become profitable or service their debt.
I and cable industry insiders I have spoken to, consider SRCM's existing "internet like" services as unable to compete in the internet service market. It is widely felt that their technology is dated and has been leapfrogged by better technology and services. I see their patents as insignificant.
Furthermore, the company has a long (over 5 year) history of providing HYPED up promotion of their supposedly "new technologies", but they have never produced any service that has made them profitable.
Following are links to reports on various aspects of SRCM's business performed by myself. Consider this a work in progress as it will be updated as additional information is attained. The opinions expressed are my own, please do your own DD before making any decision about your own investments.
***20 Million Dollars Of Directors Selling Stock May 19-20***
~ The Wrong Move For Believers in SRCM's Technology.
~ The Wrong Move For Guys That Think The Company Has A Chance of Being Bought Out. post.messages.yahoo.com@m2.yahoo.com
***The Big Picture - SRCM's Patent Not Worth Buying or Licensing***
~ By The Time a Product is Developed With SRCM Technology Product Will Be Out-Dated
~ Why Cable Companies Will Choose Other Internet Service Over SRCM Technology
~ Cable/Internet to PC - Not Protected By SRCM Patent
~ Cable/Internet to TV/PC Hybrid - Not Protected By SRCM Patent
Message 5240114
Message 5240358
***Huge Losses, Huge Debt, Huge Dilution***
~ Company Never Profitable
~ All Company Assets Are Pledged to Debt
~ Company Must Use Borrowed Money or Proceeds From the Sale of Stock To Pay Its Bills
~ Considerable Ongoing Dilution From Options, Stock Sales, Warrants
Message 5229689
***Can SRCM Management Be Trusted? H Y P E vs R E A L I T Y***
~ Disturbingly Different Stories of The SRCM Interactive Channel's Failure In Colorado Springs Quits post.messages.yahoo.com@m2.yahoo.com
***SRCM Spends 45 mill to Buys What Seems To Be A Dying, Replaced Industry - Why?***
post.messages.yahoo.com@m2.yahoo.com |
