Microforum Inc
MCF
Shares issued 18,133,966
1999-04-16 close $2.42
Monday Apr 19 1999
BOARD PUTS RELEASE ON HOLD, OTHER NEWS MAY COME SOON
by Stockwatch Business Reporter
After consulting with its auditors and legal counsel, Microforum Inc. has
reconsidered issuing a preliminary statement regarding fourth quarter results.
According to president and chief executive officer Howard Pearl, a news release
was "all ready to go" but has now been put on hold and may not be issued in
advance of the audited statements. Mr. Pearl says that he does not anticipate any
changes resulting from the auditor's review. Nonetheless, investors will likely have
to wait at least another month before learning whether their expectations have
been met.
In the frothy market for Internet stocks, where companies with little revenue and
huge losses somehow manage to rack up multi-billion dollar market capitalizations,
many investors seem to pay little attention to the analysis of financial statements or
other traditional valuation techniques. Mr. Pearl admits that he is curious to see
what the reaction will be when the company's fourth quarter results are released.
"Whether they react positively or don't even take any notice, we will continue to
profit," he adds.
According to Mr. Pearl, the company's traditional underpinnings "are starting to
pay off." He suggests that many of the hot Internet companies do not have the
foundation of experience and management structure enjoyed by Microforum.
"We're coming at this the other way around," Mr. Pearl says. As part of a
restructuring process, Microforum announced in May 1998 that it would be
concentrating on electronic commerce and the Internet. The financial statements
for the nine months ended Nov. 30, 1998, clearly indicate the company's
foundation in more traditional enterprises: just over $3.5-million in revenue was
attributed to Internet and multimedia services; approximately $18.6-million was
generated from marketing, distribution, advertising, and public relations. Among
the questions investors are keen to have answered is whether there has been
significant growth in revenue from the company's electronic commerce operations.
It appears that a specific answer to that question will have to wait; Mr. Pearl
declined to comment on the record.
Investors have not had to wait very long for news from another quarter.
Microforum completed the acquisition of Software Guaranty Inc. on March 10
and has moved quickly to consolidate the company under the same management
and out of the same facility as iFront, Microforum's electronic commerce solutions
arm. On April 13, with the new acquisition operating as a division of iFront,
Microforum announced that National Bank had chosen Software Guaranty's
CALMS (Cyber-Active Lending Measurement System). Mr. Pearl says that he
had been in discussion with National Bank before the Software Guaranty
acquisition and, in fact, had been working on the deal for about three months. He
is confident that the National Bank deal is just the first involving CALMS.
Microforum's Bruce Hodges says that CALMS is "one of the best kept secrets" in
electronic commerce solutions but that may not last much longer. Mr. Hodges
declined to comment on what strategic applications of the system National Bank
would be deploying or when they would be implemented. According to Mr.
Hodges, the system can be used in any environment involving an application for
credit. Mr. Hodges says he is "not really a computer guy"; his background
includes eight years in banking before joining Software Guaranty in January 1998.
That background has him convinced that there is a market for CALMS,
particularly in banking and leasing, that has yet to be tapped.
Mr. Hodges says that CALMS can go from credit check to vendor payment in 20
minutes, cutting down enormously on both time and paper flow. No software
application installation is required; all the user needs is a browser and a password,
Mr. Hodges says. The necessary information is entered in a customized credit
application, encrypted, and submitted. The web-enabled program then pulls a
credit bureau report, scores the application, and can trigger an electronic payment
once it has been approved. According to Mr. Hodges, that represents only the
basics of what CALMS can do.
Howard Pearl is also enthusiastic about the potential for Microforum's latest
acquisition. He suggests that there may soon be an announcement regarding
another deal involving CALMS, possibly early this week. Previous deals
announced by Microforum have been subject to non-disclosure agreements,
leaving investors in the dark concerning the specific financial terms. However, Mr.
Pearl suggests that the next announcement will come with the price tag clearly
visible. What may not be disclosed in this case is the name of the customer.
Investors can hardly complain about a dearth of news from the company;
Microforum has recently issued four releases in the span of a week. Trading in
Microforum has also been up dramatically, with more than 13 million shares
changing hands in the past five trading sessions. The stock ended last week at
$2.42, up 84 cents from its close the previous Friday. |
