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Technology Stocks : RACE
RACE 378.13+0.5%Dec 26 9:30 AM EST
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To: White Shoes who wrote (115)3/5/1997 11:11:00 AM
From: Q.   of 130
 
I've been looking at RACE as a possible short.

Here are the negatives:

The finances for the co. are just horrible. Negative cash flow, negative retained earnings, little cash, no record of consistent earnings.

Due to the extreme lack of cash and a shareholders equity that had dropped to the point where they would not qualify for continued NASDAQ listing, the co. just closed on a private placement of $5 M of convertible preferred. It will convert into common at 85% of the market price. This will result in about 10% extra being added to the shares outstanding over a few months. Deals like this are often very unfavorable for the stock price.

On the other hand, here is the positive:

The new Be There! product does sound interesting.
It is described at the company's web site at:
bethere-datarace.com
The co.'s SEC filings indicate this product is the only one of its kind. (Although as I understand it future ADSL modems will provide many of these features -- simultaneous internet phone and fax connections on a single ordinary phone line).

There's quite a lot about the product that I don't understand.

The cost per port (about $1900) looks high enough that I wonder how big the demand will be. And does appear to be strictly wedded to PBX phone architectures, so that its use is apparently limited to company employees working at home and on the road who need to use the company's PBX network remotely. That might be a big market, I'm just not sure. It's not clear to me anyway whether one part = one user, or whether some other ratio might apply. And I haven't determined whether there are any patents that would keep anybody else from moving into the market if it turns out to be a winner.

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