Grant, it looks like BJ gave a good answer on the number of companies in phase 3. I think he had 4 in May. That's only 4 months. Don't know if he went back farther.
As for revenue expected, I doubt Par said it would be the biggest revenue generator that soon. I know in December he or Xin one told me that they expected to add about one client per quarter. This forecast also assumed that each customer would continue to purchase products and services. Actually may be even better if the trend of NEC's and FORE's referring customers to Osicom continues. I always figured the relationships would pay off.
Why another company doesn't buy out Osicom troubles me, too. I mentioned a long time ago that they should do a stockholder protection or poison pill (can't remember what it's called) where if anyone buys over 5% or so of the stock, certain provisions kick in unless the Osicom board approves. I guess it's possible that they have one of these in place, but I haven't heard.
Since Forrester research mentioned Osicom as a potential target a few months ago, I suspect it's not a matter of not being well enough known. Of course once a company starts trying to acquire that many shares, the price rises quickly. Some times they pick up shares gradually over time, but they do have to report this to SEC, I believe after 5% ownership. That triggers a price escalation that could run Osicom up to Brooks Fiber or Ciena levels. After all, Brooks Fiber was over $1 billion market cap and had less revenue than Osicom (when they were acquired by MCI or WorldCom). One reason I'm buying is that I like their $15 - 17 million dollar market cap with revenues around $100 million.
As far as the convertible preferreds, I'll admit ignorance. I printed the report that was filed and it was about 100 pages. There were so many conditions, contingencies, exceptions and such to everything that you would have to be a lawyer to figure it out. I've seen people on this thread take parts out of context to prove their side without ever mentioning that there were 100 exceptions and contingencies and parts 20 pages later that could change the whole thing. I'm not at all convinced it's floorless, and I don't think CS First Boston is going to ruin their reputation by using the floorless trick to benefit from what could be seen as stock manipulation. I think they did due diligence on the prospects of an emerging company and thought it was a good risk. There again, I could be mistaken. I don't know anyone at CS First Boston, but they are certainly big. But it only takes one small branch to end up with a crook at the helm and then anything goes.
Anyway, I think the market has built-in the worst case scenario for Osicom. The worst case would have been a quarterly revenue falling way below $20 million. That didn't happen. It also would mean no GigaMux sales. The industry would have to have decided after evaluation that their product didn't work. That didn't happen. Worst case was also hinged on Osicom appearing to be strapped for cash. They expect to increase their cash position next quarter (cash positive after expenses and extraordinary items), and though they could use more growth capital right now, they are far from the end of their credit facility and have cash on hand. Moreover, their arrangement for financing leases of equipment gives them a method for bringing in additional revenue.
I'll admit I'm in a position where I have to see the positive side and therefor have looked harder for it. It's not nearly as hard right now as it used to be. Although the stock price is drastically down after the 1 for 3 and big market crunch, I actually feel better about the prospects than 3 months ago. For me, averaging down makes sense. Still risky, no doubt. |
