Finally, the unkeepered medium of the web is the message for tiny Ampex. And it comes at no better time because I have just about aligned myself with you regarding the drop dead zone for this stock: last quarter of 1999.
Earlier this year, I had digitized my trading diaries to sort out all the bad investing habits I picked up this year. Guess what the source of most of them have been? Rhetorical. LOL.
Aside from being the only stock I have ever bought from the pink sheets, Ampex has been the most fun to research because of the wide applicability of its decades old technology base -- digital video, digital storage, military-industrial complex supply chain, exotic financing, parallel computing hardware and software, networked storage etc. The work I have done in this stock continues to be very useful and profitable to me as I tool around in the different parts of the technology food chain as an investor and as a businessman. It's just too bad that this stock hasn't been as profitable because like everybody else who has bought this stock in the last two years I am carrying this one at a loss.
Ampex is an averaging-up situation for me. When the stock dipped below $3.00 I had given up all the gains I had booked since 1995. That was also the point that my lifetime average in averaging-down situations dipped below .500 which required me to switch to an averaging-up position and give up all attempts to repair my entry points save for some token seasonal trades.
And I'm still waiting to average up. Considering the moves I have seen so far -- a)I liked the Micronet acquistion primarily because it broadens AXC's product line; b) I still question why AXC didn't go after EMASS (great German mixed-media automation and high performance storage backup software which had $67 million in revenues that ADIC bought for $27 million). Cash-tight ADIC borrowed $20 mil to buy EMASS. AXC could have won that bidding contest. c) purchase of a Web host option. -- I am still not comfortable with the debt burden that AXC assumed.
It's good that AXC is focusing on the web and apparently going to use it to showcase its video and audio technology, because, I gotta tell you, the internet represents the best chance this stock has for plowing through all the resistance points this stock has accumulated over the last two years. Ed Perry can tell you better than I but technical resistance is defined as the supply of stock held in the hands of eager sellers at various price levels. In AXC's case, that would be supply of stock held in the hands of people, with varying appetities for pain, who are just dying to get out.
While the wicked undertow of tax-loss selling continues to drive the stock down, I'm going to wait, with a deadline this time, for Bramson and his crew to show that they have embraced and understand the economics of the internet and the way that the internet is...
a) revolutionizing the supply chain
b) changing the way people play the games that people play.
As I see it, the latter is where AXC can maximize the commercial potential of its branded knowledge base in video and signal processing and finally achieve commercial mass market success status that has always eluded it after all these years.
There's a lewd scene in Howard Stern's move, Private Parts, that, in some screwy way, captures the essence of the analog-digital knowledge base that attracts me to AXC. Picture this, if you haven't seen the movie. Howard Stern gets a call from a listener and then proceeds to tell the blonde lady on the other end to get totally naked and straddle a big speaker which she was told to lay flat on the floor. After turning the volume on really loud, Stern then proceeds to make a prolonged series of rumbling noises which are transmitted over the airwaves and which are processed by the component stereo system and ends up coming out of the speaker. As you know better than I, Hal, the interplay between electricity and magnets causes vibrations. Those sound vibrations emanating from the woofer brought the woman to, pardon the french, orgasm, which was all captured by the telephone and broadcast over the air. This moment propelled Howard Stern to the bigs, going by Stern mythology. Really funny scene. That was some kind of force feedback, wasn't it?<g>
The way users interact with computers, which are rapidly being appliancized, on both analog sides of the digital domain is available for AXC to exploit. The most popular ones like speech recognition (digitizing analog voice), joystick force feedback, etc are getting better and better all the time (with more and more players). I've encountered sightings of several Bay area virtual reality startups that are developing flexible body suits with system-on-a-chip electrodes that attempt to go beyond the low lying fruit of long distance therapeutic massages and applications of electrical streams, and after the holy grail where if a user reaches out to touch someone over the computer, it would be possible for that someone on the other end, properly equiped of course, to experience something resembling a human touch, a warm caress or a jolt of electicity, as the case maybe.
The core technology there is beyond me, but I am certain it involves very, very tricky analog to digital and digital to analog conversion processes that would be well within the developmental reach of a company like Ampex that has been doing its analog and digital act in the most demanding arenas of broadcasting and data recording since the forties.
Potential is one thing. Execution is another. And so I wait to see what they do with the web host.
Regards,
Gus
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