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Technology Stocks : Zitel-ZITL What's Happening
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To: Jacques Chitte who wrote (16934)7/30/1998 3:19:00 AM
From: Marconi  Read Replies (1) of 18263
 
Hello Alex M:
No real idea of how it will trade. All else being equal, running a business with negative margins in every segment is a corrosive management practice--so price erosion should be the main fare. Zitel management is known for hype, but that is having less and less loft effect, sometimes only hours in recent history. And if Zitel management makes meaningful announcements including terms, then one can estimate the contract rate needed to carry burden as well as justify market cap. The latter would require miraculous performance. And Zitel management has not shown such candor to shareholders in recent years. The lessened drag of storage should help prolong matters. Their latest qtrly press release indicated 140+ employees--I would estimate a cash burn then of nearly $15M per year [$100K per employee]. In a practical sense, that approximates the end of this year. All the same then, suggests about a buck a month or shy of a teeny (1/16th) per day. Picking the Dec 5 puts at say 1-1/4 and assume 0 at year end for round numbers, that could represent an annualized return of 700%. I think that is steep so maybe look for something half that for the year, all else being equal. The more material information ZITL publishes about business the more closely the value can be estimated and the greater their hype can be discounted.
Best regards,
m
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