here is the article from individual investor on cust...the article begins a few lines below...happy reading
SELL SIGNALS: CustomTracks Stock Ripe for a Bludgeoning
Tell us what you think in CUST's Board.
TODAY
I. I. A N A L Y S I S
MICROCAP JOURNAL: Hello Direct, Registry Magic
Late to the Party -- Oil Patch Upgrade Comes After Stocks Skyrocket
Dillard's Stock is On Sale
Peapod: One Veggie Best Left on Your Plate
Is Fatbrain.com the Next Hot Net Stock?
Rambus: Living in Royalty
Why Nordstrom is Still No Bargain
UPDATE: Healthy Outlook Continues at Pharmaceutical Product Development
Australians Still Waiting for the Impact of the Asian Crisis
Activision: Action-Packed Growth Prospects
CS First Boston Says 'Sell' Big Banks Amid Y2K Concern
UPDATE: Cendant Continues to Trim Down
SELL SIGNALS: Investors in Hauppauge Digital Should Bag Profits Now
RADAR SCREEN on INSIDER TRADING
TAUB TALK: Forrester Fiddles While Internet Stocks Burn
C O M M E N T A R Y
Why the Dow Jones Utility Index is Gaining Despite Rising Interest Rates
TAUB TALK: What's up at Polaroid?
DID YOU MISS A DAY?
Last 7 Days Archived
--------------------------------------------------------------------------------
iionline.com
Director of Online Research: Dave Sterman (5/25/99)
Last fall, shares of CustomTracks (NASDAQ: CUST - Quotes, News, Boards) traded hands for the price of a burger and fries -- $3.50 to be exact. On Monday, the stock rose $15.06, but in early trading today has given back three points to a recent $73. The fact that the stock has had such a price run is all the more remarkable when you consider that the company has no current business to speak of.
CustomTracks is now worth $1.1 billion on paper. And much of that value rests on the shoulders of head honcho David Cook. As a founder of Blockbuster Video, Cook has credibility on the Street for delivering smart new concepts. And investors are betting that his latest idea, to provide secure payments over the Internet, will be a huge winner.
Like this Article?
But before investors jump in too fast, they should take a peek under the hood. Cook, who rejoined CustomTracks last year, has already taken the company's shareholders on a wild ride. Convinced that the company's current businesses were dogs, he persuaded the Board to sell all of its divisions and change its name from AmTech. His idea was to raise cash to deliver a new method of home-brewed CDs through retail store kiosks.
The Board acquiesced to all his demands, freeing Cook up to pursue his admittedly intriguing vision. Trouble is, Cook tried this once before while at Blockbuster, only to find that record companies thought little of the idea. Round two met with a similar fate. 'No go' say the major record labels. The company hopes to revive that idea down the road.
Eureka! I've Got It (again)
Flush with cash but no business to run, Cook hit on his Next Big Idea: an Internet Transaction Payment System. Smooth move says David Weinstein, at Joseph Charles & Associates. 'The music business is a much smaller market then the markets they are currently entering.'
And Weinstein adds that 'the biggest impediment to the growth of E-commerce is the lack of Internet security and the fear consumers have of putting their credit cards and personal information on the Internet.' Hard to quibble with that notion.
Weinstein figures that the company has the goods to match wits with established players such as Verisign (NASDAQ: VRSN - Quotes, News, Boards). As proof, he cites 'the high degree of confidence that CustomTracks has in its technology, (which) is highlighted by a remark made by Douglas H. Kramp, the company's newly appointed and first Executive Vice President for Strategic Business Development.'
Says Kramp: 'CustomTracks Digital Signature Technology, in my opinion, is the most exciting development on the Internet since the browser.'
Fierce Competition
Digital Signature Technology is indeed exciting. Many other companies agree. Verisign is working with Critical Path (NASDAQ: CPTH - Quotes, News, Boards) on a technology to secure e-mail over the Web. Other companies such as Netegrity (NASDAQ: NETE - Quotes, News, Boards), Security Dynamics (NASDAQ: SDTI - Quotes, News, Boards), CheckPoint Software (NASDAQ: CHKP - Quotes, News, Boards), Entrust Technologies (NASDAQ: ENTU - Quotes, News, Boards), and Axent Technologies (NASDAQ: AXNT - Quotes, News, Boards) all have designs on the market for secure communications and transactions over the web.
Those companies have a combined $600 million in annualized sales and are growing very quickly. CustomTracks, as noted, has none.
Trying to handicap a winner in the field misses the point. The issue that rankles: CustomTracks has no history in this arena, unlike all of the competitors cited above. The stock is simply rising quickly because Joseph Charles' David Weinstein, a little-known analyst at a little known firm had the coconuts to set a $230 price target. Well at least he succeeded in getting his name and that of his firm on the map.
Bottom Line:
Part of the stock's impressive run is also attributable to a massive short squeeze, highlighting the danger of getting in front of these stocks. Investors should watch from the sidelines until the stock hits a plateau. When it finally breaks, it will break hard as analysts that follow those other firms lend a dose of reality to shareholders of CustomTracks.
|
