From raging bull post 2260
Just got off the phone...
...with John Mason. The first time I've called. He was quite up front with me.
The reason for the delay in the conference call: FIBR's auditors could not do both, the IPO and the quarterly statement; so they chose the IPO. The IPO is a standard rights offering; many of these do accompany additional shares offered to the public; some do not; Tucker Anthony specializes in these types of spinoff offerings, having done many, including Safeguard Scientific and its spinoff of Docuform; Tucker Anthony's law firm is Morgan, Lewis & Bockius, which I can vouch for as one of the nation's premier firms.
John gets a lot of calls. He got one yesterday from someone asking "Who is Mr. Anthony?" "Who?" John asked. Caller: "The investment banker taking NETsilicon public." The guy thought Mr. Tucker Anthony was a single, individual, person-type banker.
He said that Tucker Anthony has an analyst, a Mr. Becklean (sp?), who specializes in the integrated circuit industry and is widely regarded. Tucker Anthony would not have accepted this deal without Becklean's approval.
There will be a road show. Becklean will "follow" the stock, and, I assume, recommend it.(In my opinion, if he recommends NETsilicon, he'll either tacitly or actually recommend FIBR.)
Concerning the announcement of the European telco without name, without dollars: The p.o. has been received and the equipment has been shipped; despite that, the European telco did not want to reveal its name now (apparently European companies are like that), but will OK it in the future. Osicom hesitated releasing this announcement but wanted to counter the bizarre theories that Osicom has no products for sale, etc. etc. etc.
I mentioned the problems Ciena is having with its machines "overheating." He said that it wasn't a question of the machines overheating but of their reacting to changes in temperature. When the temperature rises and falls, the lasers experience a "wandering of their grid patterns." He said a European prospect has been testing the Gigamajig and subjecting it to radical changes in temperature, turning their heat and air conditioning up and down, up and down. No problems.
Naturally, John refrained from giving me any info that was improper. He's very aware of the securities laws. For example, he said: Do you think for a minute that we'd release a statement about a European telco buying the Gigamajig (Shiek's word) unless it were true? We'd take a quick walk into a federal slammer.
He spoke about the IPO. I told him about the negative message of the spammers (and increasingly some longs here) that we're buying what we already own. He said, assume that you don't exercise your rights and you just let them expire. Assume that Tucker Anthony sells it out at, say, 8 or 10. If it goes at 8, then the market cap of NETsilicon is $50 million. FIBR owns half of that value or $25 million, which is more than the market cap of the company today. How, he asked, does that hurt the shareholder.
Surely everyone here would agree that IF the deal goes off, FIBR stock will necessarily rise. IF the deal does not go off, i.e., if Tucker Anthony cancels it, then the shareholder loses nothing (although I personally think the stock will slide if the IPO doesn't go off).
Concerning Tucker Anthony's "out," every investment banker has that option to cancel the deal. They wouldn't accept the arrangement if they did not have the power to cancel the deal. Suppose, for example, that you owned an investment banking firm slated to take a firm public this next Monday. In light of today's bloodbath, wouldn't you cancel the deal? I would.
Finally, he spoke about NETsilicon itself. Pete Peterson is developing the company and its markets with savvy and foresight. He is designing the product so that it becomes a standard (much like MicroSoft did and Apple didn't). Others, then, will design their products around that standard, ensuring that Net+Arm chips are designed in. The market, he said, is huge, and Pete Peterson fully expects to develop a billion dollar company.
I asked about the "Par factor." He cannot understand why Barron's put that article on the FRONT COVER, a story about a small tech company. He said that people on the inside get very exercised about portrayals of Par as dishonest. He said that they have a bunker mentality and that when attacked their inclination is to roll up their sleeves and work all the harder. He asked me if I knew how much DPI cost Osicom. I knew and said "$5.0 million." Right, he said. How many people do you know who could buy a company at $5.0 million and within two years sell it in an offering likely to yield a value of $50 million. This assumes, of course, that the IPO goes off. He gave every indication that they fully expect it to.
I asked why Gorman doesn't own stock. He said he didn't know about Gorman's financial situation. He pointed out that Osicom employees are not overpaid (Peterson, I think, gets about 150K as CEO of NETsilicon; it's in the S1). Many do not have a lot of money. In fact, many are working because they believe that the company will compensate them well one day. That they can exercise their options (which are far far out of the money) and be well compensated that way. He said that Gorman is one of the hardest working people he has ever worked with and that even though he, Mason, comes early and stays late, Gorman is always still there when he leaves.
I guess that about covers it all. Thought you all would want to know.
I'm still long. Very long. And if I can find some bullets, I will exercise my rights to NETsilicon. Fact is, by the time it comes off, I fully expect to be able to borrow against my FIBR stock or to sell some FIBR at a profit and move it into NETsilicon.
We'll see what happens. But it won't happen until we get either a Gigamajig announcement with names and bucks or some good solid black ink in Q3. So I'm willing to wait until November 27. I have a strong belief, however, that by middle to late October we'll be counting some profits in our respective portfolios.
JHMO.
Good luck to us all,
Heels67 |
