I spoke with David Collins over the phone yesterday afternoon and got some information. Probably most, if not all of it, is old news, but I'll tell the gist of it anyway. These may not be the exact words as they're from my hurredly writing down what I perceived hearing.
He said that Wave was quite confident about the way OEM deals are progressing, and that senior management has a very high degree of confidence in the state of negociations. When I pressed as to timeframes regarding these deals he said that by year-end would not be an unreasonable timeframe. Responding to a question about the status of things at SMSC his reply was that they should have prototypes by year-end, and it takes OEMs a month or two to test them. SMSC pays some of the development costs (don't know what percentage), and they don't share in the revenue. The Hauppage market, the WinTVs, is not expected to be big, only 20-30,000 tv tuners annaully I think. In response to a question about National Semi he said negociations are ongoing.
I asked him about the company's cash position and needs. If they get an OEM agreement they will need $10-20 million initially and tens of millions total, maybe up to $100 million. Here's the bad part: The company only has enough cash to get them through early December, and they hope to raise at least $1 million, but more probably $3 million very soon. Their cash burn rate is $2-3 million/quarter.
I told him that many people believed that Wave was being sold short. Mr. Collins said that since it's a bulletin board stock the only people who can short it are market makers. He said that market makers tend not to know that much about the stock they're making a market in. Maybe I didn't hear that right because I tend not to believe it. He thought that people just got very disappointed that the deadine mentioned by Steve Sprague in the CRN article was not met and bailed, esp. since there was a horrendous bear market in small cap stocks. And people had held onto Wave throughout this time on the promise of that article. I asked him if any hedge funds might have sold, esp. since many of them had derivative problems, with margin calls, and had to raise cash. He didn't know but told me that hedge funds can easily own this stock while mutual funds cannot since they have certain requirements, such as listing on certain exchanges and minimum capitalizations. Thus, it's not ruled out (my words).
One other thing. In the annual report it states that "As of December 31, l997, the Company employed 41 fulltime employees." D.C. told me that there are now 70 employees. I'm assuming they're fulltime.
Anyway, that's it. Make of it what you will.
Harold |
