General Magic Inc. ÿÿ Dow Jones Newswires -- August 4, 1998
Goldman Sachs: General Magic's Cash Burn Rate To Rise
NEW YORK (Dow Jones)--Goldman Sachs & Co. analyst Michael Parekh said he expects General Magic Inc. (GMGC)'s quarterly cash burn rate of $9 million to increase as the software company supports its Portico virtual assistant service, according to a research note released Monday.
General Magic previous disclosed that it expected its cash burn rate to go up modestly as it began to market its Portico service. The company had been spending $8 million to $9 million per quarter for the past year.
Parekh maintained his market outperform rating on the tiny money-losing Sunnyvale, Calif.-based company. The analyst wasn't available for comment.
General Magic is focusing on promoting its Portico service, which allows users to access e-mail, voice mail, stock quotes and news, as well as schedule meetings, over a phone with voice commands.
Portico was launched as planned July 30. In a research note, Parekh said the service is likely to provide sequential quarterly revenue growth. The analyst said he expects further momentum as Portico's
advertising campaign launches prior to the holiday shopping season.
If General Magic were able to sign up to 500 Portico subscribers a week by the end of the year, the company could see revenue contributions of $100,000 in the third quarter and $500,000 in the fourth quarter, Parekh wrote.
In its second quarter, General Magic lost 82 cents a share on revenue of $91,000. In the year-ago period, the company lost 25 cents a share on revenue of $297,000.
The company's stock has been hit hard in the past three sessions. General Magic plunged 19.9% Monday to close at 6 13/32. In Nasdaq trading, the stock recently traded up 1.5%, at 6 1/2.
The company said Monday that there was no fundamental reason why the stock had been sold off so heavily.
-By Maria Georgianis; 201-938-5244 |
