NY POST ARTICLE TODAY's POST>>>>>>>>
HYPED 'NET STOCK IS SOURCE
OF TROUBLE
By JOHN DIZARD
LOOK aft of the Staten Island Ferry, at the garbage
pulled in the ship's wake.
Then think of the great Internet stocks: Yahoo!, AOL
and @Home. Dallas-based Source Media (SRCM,
Nasdaq) is the garbage pulled along in their wake.
The company has enlisted some promoters, including one
"analyst" whose firm slithers around the swamps of Boca
Raton, Fla., to put forward the idea that Source Media's
patents can be used to extract hundreds of millions, if not
billions, from the users of high-tech, Internet-capable
TV set top boxes.
Well, they can't.
Source Media's patents cover clumsy, low-bandwidth
ways to use a phone keypad to interact with cable
services and the Internet. The business model isn't based
on service delivery but on suing real companies.
Take your Uncle Gekko's word for it. Source Media's
patents were already used in a stock promotion gimmick
in Canada in the mid-80's, before they went back in a
lawyer's drawer. They're not 0for use - they're for
buying and selling.
The promoters need to keep Source Media's stock above
20 for 20 consecutive trading days.
If the stock stays at that level, the company forces some
public warrant holders to exercise and purchase stock so
it can collect a little over $25 million. At the same time,
Source Media insiders get to exercise some cheap
warrants of their own, and cash in without a waiting
period.
Friday marked the 13th day Source Media's stock was
above 20. If it falls, the promoters may well try and
engineer a short squeeze.
The company's management did not return my calls.
I know that the Washington heat is tough on the people at
the Enforcement Division of the SEC. But they could put
down those hand held fans long enough to make a few
calls and find outwhat's going on here.
Vice President Al Gore went to Moscow last week to
build another "partnership" with a crooked Russian
prime minister.
This time it's Sergei Kiriyenko, 35, the Scientologist,
scratch-off lottery entrepreneur and ex-"banker" who is
the administration's current protege and "reformer."
For some reason the vice president and the hacks who
work for him think of Kiriyenko as a post-Communist
man. This is hard to understand, since Kiriyenko started
his career as a Communist youth movement bureaucrat.
He then became one of the launderers of the "party
gold," and helped with the party's privatization, name
changes and downsizing into a crime syndicate
specializing in large-scale theft, rather than the less
profitable slavery and mass murder.
Kiriyenko has learned the "reformist" talk well enough
to con the administration, whose top Russian policy
people are the special ed class in the school of
international intrigue.
He hasn't gone over quite as well with the money people.
Remember the Russian rescue package of a couple of
weeks ago? That's the one where you and the other
taxpayers in the "developed" world came up with $22
billion to save Boris Yeltsin's government from
devaluation and collapse.
The idea was to substitute cheap dollar bonds, yielding a
mere 14 percent or so, for the ruble denominated
treasury bills, or GKOs. At the end of the week these
were yielding around 60 percent for one-year paper,
after briefly declining to 45 percent on the news of the
International Monetary Fund led bailout.
The bailout was supposed to relieve the financing crunch,
and, more critically, make Al Gore and Deputy
Secretary of State Strobe Talbott look less like fools for
backing a criminalized government which now has a
shorter projected lifespan than the average Norway rat.
The current plan is now due to blow up late this fall.
Unlike the vice president of the United States, the hedge
funds have access to calculators. They've figured that
even with a successful redemption of the shortest-term
GKOs, the Russian government runs out of cash again
sometime between January and April.
The exchange offer has bought the Russian government
about an extra three weeks of life.
In the meantime, American and many other foreign
banks are now unwilling to confirm the letters of credit
issued by Russian banks. That means that the stocks of
imported consumer goods - 60 percent of the Russian
supply - are running low.
So there are a growing number of very unhappy people
in Russia, including middle-class people, who can't or
soon won't be able to buy what they need.
Oh, there is one type of manufactured product in good
supply there. There are an estimated 25 million loose
AK-47s and AK-74s in the country.
How would you like to join the riot police in Moscow?
To defend this government? Against a mob? Sound like
fun? I wonder whose side they will take after the ruble's
maxi-devaluation, which is when the balloon fully
deflates.
There are fewer ways to make money in Moscow these
days, but my friends are putting as much as they can into
betting on a Boris Yeltsin departure by December. The
problem is finding anyone to fade that action.
Please send e-mail to
dizard@nypost.com
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