Hello Mr. m,
I think Bob Trocchi summarized the gist of it pretty well.
I was pleased to read an article about Zitel, because I think that
it is a very interesting story. However there wasn't a great deal
of depth to the article, although there were several snippets from
people we know from this forum, which I thought made it interesting.
Here's a few snippets:
Steven M. Kaplan remembers the
moment vividly. Just back from a week's
vacation in Aruba, the Long Island
accountant was staring at Zitel's
(ZITL:Nasdaq) stock price, which had
zoomed from 5 to over 70 on investors'
belief that the company would make big
money helping companies fix the year 2000 computer bug.
Kaplan, who had bought the stock more than a year earlier at
the split-adjusted price of 6 1/2, was on the Charles
Schwab Web site, poised to sell his shares for 70 or better.
But just as he was about to click his mouse and execute the
trade, he looked over at his desk calendar: Dec. 30, 1996.
Better wait until Jan. 2, he thought, to delay paying taxes on
the capital gains.
...
Stan Corker, director of technology research for Emerald
Research, offers additional reasons, such as mistakes made
by MatriDigm's management. "We believe the technology is
still a good technology, but [MatriDigm] has definitely not
executed as well as it could have," he says.
Still another assessment is offered by John Howell, a
software consultant from Huntsville, Ala., who says he made
more money shorting Zitel stock than he makes in a year at
his day job. He says he was skeptical of claims made by the
company and its chat-board boosters. "The thing that
smelled the most was the idea of the automated fix," he says.
"Assuming you generate the source code automatically,
you've still got to test it. That's a manual process. There's no
way around that."
...
and finally,
Assessing what he has learned from the Zitel experience,
Corker seems sadder and wiser. He talks about the risks of
relying on skimpy market information and about the emotions
that rule individual investors. "It probably should be kind of a
case study for those people who are investing in Internet
stocks today," he says.
With the Internet industry, as with the Y2K industry, "you
know that it's going to be successful," Corker says. "You
know that it's going to generate billions of dollars of revenue.
But when you're in the front end of that kind of situation, you
can't really accurately identify who are going to be the
winners and who are going to be the losers."
For John Howell, shorting Y2K stocks was a harbinger of
profits to come. "I'm about ready to short these goddamn
highflying Internet stocks, too," he said earlier this month.
"They're such a joke."
- Daniel |
