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Technology Stocks : ICOM: Investment Discussion
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To: james d. hargrave who wrote (295)11/19/1998 3:37:00 AM
From: Carl Hindman  Read Replies (1) of 494
 
I don't see a reverse split is likely as there aren't enough shares outstanding re the existing covenants with Citadel.Maybe you see something here that I don't.

The big problems for ICOM are near term and possibly very deadly IMO viz:
- NAS delisting. If NTA have dropped below 4M then there is
trouble, and the loss they just took may be enough to
get them close. Can't tell for sure looking at the 10q
as they didn't provide a balance sheet but I think they
cant be more than 2-3 M from the threshold. Note also
the their accountants dropped them.
- Cash. They are out of their credit facility by end of
CY 98. If backlog doesn't start to look reasonably
healthy by then they will have to issue stock and
the dilution could be significant, especially on top
of the preferred they are already saddled with.
- Chap 11. If stockholders attempt to avoid dilution
they could go into default and that would be the end
of the party. Could happen anyway with another quarter
of heavy red ink.

On the plus side they have products that some will covet,
especially SONTELYNX (see MOT announcement) and LANscape
with the new Dell channel and recent installation simplifications
The trouble is that it's not easy to see how these can change the bottom line in time to solve the near term problems. Just look at the ITA deal, it's real money but when when when?

If the stock drops below 1.5 to 1.75 and manages to stay there they will be a strong buyout candidate and even a 100% premium doesn't reward historic shareholders if they could get and they don't have much bargaining power.

I think they have to announce real revenues in this quarter
even if they are booked for 1q 99 or later. Product announce-
ments won't get them by this time as the downgrades (strong
sell!) indicate the analysts have had it with ICOM.

I've made money bottom fishing this one before but this time
it's looking riskier, they need to perform for real now and
soon or they will drop off the screen one way or another.
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