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Technology Stocks : General Magic

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To: Sea Otter who wrote (4453)	12/18/1998 6:15:00 AM
From: trust200	Read Replies (4) of 10081

Sea Otter, you asked for the name of my company. It is HGL Zurich Trust in Zurich. Because you seem to be very knowledgable about GM, I would be interested to share with you some of the topics that I discussed this monday at the company and to get your feedback. One of the issues is their relatively new orientation towards internet partners. In fact, McCormick believes that the future revenue split will be around 50% internet partners, 10-15% portico and the rest telcoms. The 50% share that he allocates to internet partners didn't exist 6 months ago. So their ideas about future business models seem to be evolving at the same speed as the internet itself. He is excited about the internet partner model - such as Intuit - for the following reasons. It is interesting for them because 1) they can close deals quicker 2) Internet partners are under significant competitive pressure themselves so a VUI is a clear differentiator for those internet partners 3) it would give GM instant wall street recognition 4) if they close a deal, revenues would start to flow very quickly. The problem with internet partners is that such deals - because of the nature of these partners - would come very suddenly and ad hoc. These IP's are ready when they are ready and then they want to move very quickly. GM is in discussion with a number of internet partners. But it is hard for GM to give proper investor guidance on this. With telcoms this is easier since they test forever. This is one of the reasons that there is so little information coming from GM about business projections. What are they supposed to say ? We then talked about how exactly they think they can make money on such internet partners. It is going to be a three tiered model. Probably a free service for callers that dial into the partner through GM's VUI. At a second level a paid for Portico light. And the third level the full Portico service for a regular fee. After listening to McCormick, I don't believe that GM will get paid anything by the Internet partner in any of the three service models. So the next question is how they make their money. Because all the major portals are driven by advertising revenue, GM is clearly looking at it too. The business model is that of a radio station. You maximize your number of users/listeners and you maximize your ad rates. GM is clearly looking at these things, but it this stage it is next to impossible to put proper numbers on this. my only worry coming out of the meeting is that they are burning cash rapidly. So at some point they might need new money. They are looking at a number of options right now. A new convert will not be done since no equity investor seems to understand them. A secondary equity issue will also not be done. The most likely solution for their cash needs is going to be a strategic partner. I sounds like there will be an announcement on this before the end of Q1. Lastly, McCormick said that they will provide more regular info starting 1 jan 99. And just to repeat my previous post, there is probably a cellular announcement before the end of the year. Trust200

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