The following is a summary of my phone conversation with Gale Blackburn which took place today. She was open to my questions and concerns, and spent quite some time discussing Boca.
She feels that the earnings release will be out end of this week or more probably, next week. They were too optimistic in hoping it would be out earlier. They are still in the process of acquiring Creatix so the audits, etc. take time.
I expressed concern about the stock price, which she responded by indicating that the price has rarely been measured accurately. The company has not been performing well financially, but this is an industry wide issue. Nothing has fundamentally changed with Boca. The transition of products slowed in the whole process has caused this industry problem. First the announcement of 56k modem slowed sales of older modems. However, they start to ship the 56k this week. The same holds true with the OEM products with the transition of MNX technology. They start shipping these products this week as well. Right now 65% of Rev. is in OEM.
She then stated that the following are the reasons to stay with BOCA.
1. Product Diversification.
a. Video Conferencing - they are optimistic even though demand has
not been as strong as they thought it would be. They own the
only hardware product that runs on POT lines called H.324,
which runs faster than some software products on market.
b. TV Internet Adapter - they are again optimistic, and begin
shipping in Mar. The product will be in stores with Boca name.
2. Acquiring Creatix.
They make analog modems/ISDN - Digital Tech. which they feel is
way of the future. There are 18 software engineers which will
assist in R&D. Boca wants to evolve to full data com. co. and
branch into software products. There is a false impression that
Boca is assuming Creatix debt. This is NOT TRUE. Boca does not
have 63 mil in debt. Creatix was a privately owned co. who will
assume its own debt along with the government. Creatix was bought
with 4 mil, which is the book value. The advantages to owning this
co. include the European locale, excell. equip. - some better than
Boca, and they had 45 mil in sales in lst half of 96. The 2nd half
of 96 they could no longer buy from Rockwell, and of course, Boca
can.
3. Retail Div.
They are already seeing results - orders from Computer City, Best
Buy, etc.
Their cash holding is around 8 mil., and their reserves are adequate for the co.s operations.
They have recently had a loss of 2 in Mgmt. One was reported (CEO?), and the other was Jerry Lumpkin who was vp in marketing. He wanted to go back into distribution. The co. is evolving into 3 bus. units - Retail, OEM, and Intern. So part of this mgmt. movement due to this restructuring.
The analysts covering the stock are Raymond James, SE Research, and Robertson Humphrey, all rate a HOLD, and estimate .05 a share.
The second half of 97 will see more breaking news and more positive movement.
I've tried to relay this as accurately as possible, but Ms. Blackburn is a fast talker, and I am not very technical, so please excuse any minor errors in tech. terms, etc. |
