George, your statement:
And if investors are comfortable with losing all their principal, they might want to think about allocating some "throw-away" money to TPII.
Is pretty extreme, don't you think? You're suggesting that that the stock may go from 7/8 to 0? In what time frame? Probably a pretty short one, if I wouldn't have time to get out before losing it all, huh? You know, even companies in dire trouble (MFN and CTN) haven't seen thier stock become totally worthless. Personally, I'd put the probability of my losing all of my principal on TPII at exactly zero.
Yes, I understand that TPII has contracted with some large rations for code-migration activities. But, here's the reasons for my reservations:
1. Are any of these systems activities that TPII has been involved in mission critical systems? I think the answer is no. Companies would not risk their business on a newcomer. Traditional approaches by IBM, Andersen, EDS, etc will still be the norm and the preferred.
First of all, you realise you're speaking about a company that has been in business for about a half a year. You're right that companies would be hestitant to trust their mission critical systems to a start-up with a new approach. It stands to reason, then, that their first contracts are not for "mission critical" systems. On one hand, even if their product is not used for critical systems, who's to say that the transformation market for non-critical systems isn't enough to support the growth of this company? Of course, I don't believe that their role will remain so limited. Eventually, the effectiveness of their approach will be appraised through their proven and tested work with major corporations like Peugeot and Raston-Purina. If they have a proven, low cost solution to systems migration, you can bet they will find buisness. Ultimately, companies are concerned with their bottom line. If they can save a lot of money through automated migration, and spend a little of the money they saved on manual testing, they will.
Your argument against them is partially simply that they're small, and new. The idea that a small company with a new approach cannot succeed in a market wherein there are big companies with old approaches is so contrary to the kind of growth and innovation we have seen in the tech sector in the past two decades I feel comfortable discarding it completely. Concurrently, one would think that someone with your obvious respect for large companies would recognize what an incredibly good sign it is for TPII to have contracted with huge, international firms as some of it's first customers. Do you think it was easy for them to do so? Do you think that thier success is an indicator that, as your opening line implies, the stock will soon be worthless?
My logic is that any company trying to break into this market with an innovative, untested approach would recognise how important it would be to obtain credibility through partnerships and contracts with companies that have name-recognition. The fact that they have been able to do so is a great sign. The market for what they are doing is absolutely enormous, and if they can carve out just a small percentage of that market it would mean great things for the shareholders. There are other advantages to dealing with a small company than a giant like IBM or EDS besides reduced cost. Small companies offer a kind of attention, personal interaction and accountability that is hard to find with huge corporations.
Finally, you have to look at the hopes a shareholder could have for a company. With 12 million shares at $.87 each, the market cap of this company is about 10 million dollars. That's cheap! A share price like that is NOT too hard to support! If TPII falls FAR short of it's original goals, and eeks out a living as a 20 million dollar company, investors in right now will still have doubled their money. TPII would not have to do gangbusters business to be a 20 million dollar company in a field worth billions.
Hence, I think TPII is a good buy. Of course it's risky -- but we're talking about penny stocks here. They're all risky, and anyone who invests in them ought to be fully aware of that. Your panic-inducing suggestion that investors in TPII would lose every dime seems pretty unwarranted at this time, however -- especially with two contracts to be announced (per their PR firm) before the end of the quarter (March 30) and six more anticipated in the following quarter.
Chimi |
