Well Adam A. has finally responded:
Technology News
Mon, 31 May 1999, 3:18pm EDT
5/31 Taurus Capital Markets' Adamou on Microforum: Comment
Toronto, May 31 (Bloomberg) -- The following are comments
from Adam Adamou, an analyst and partner at Taurus Capital
Markets Ltd. in Toronto, on Microforum Inc.'s future prospects.
On why the stock is down in recent weeks: ''You have to see
it as an industry thing. Scient Corp. has also pulled back.''
''Microforum is probably one of the first in the sector.
They've been working on positioning the company as an integrated
commerce services firm for about 1 1/2 years now.''
''On a purely comparable basis, Microforum's valuation is
just not in that league. All of the other guys are American
companies. They're listed on Nasdaq. There's an issue of
exposure. They need to move aggressively in to the U.S. American
companies have an easier time because they're local companies.''
''Microforum's biggest challenge, aside from the business
issue, is their market valuation. It makes acquisitions more
difficult, more expensive if you're going to be giving shares.''
''Even though from a revenue and operations perspective
Microforum is competitive, from a market cap perspective, they're
not, which means if they're going to go out and acquire
companies, it's going to be more dilutive to them.''
''A Canadian company has the distinct disadvantage of
starting up here. You've got a lower market cap, fewer access to
financial pools of talent and you've got a harder time raising
money.''
''If Microforum is not acquired as the bargain of the
century from any of these companies I've mentioned, you'll see a
lot of the U.S. companies that I mentioned kind of looking and
sniffing around. I wouldn't think anything is imminent, but I
think that's a possibility.''
''Microforum's strategy has to be one of being very
aggressive despite the market barrier. They need to make an
acquisition in the U.S., increase their profile down there and
they need to get a Nasdaq listing.''
''They increasingly have to re-orient themselves and become
essentially a U.S. company with Canadian operations in order to
get the benefit of the valuations.''
''At current levels, Microforum is trading at 4 1/2 times
projected fiscal 1999 revenue. They'll have a loss for the year.
Profitable in the [4th] quarter. They're Probably going to see a
loss of C$3 million (US$2.04 million) for the year. The loss is
coming from a number of different areas: expenses related to
acquisition, expenses related to development of product. The loss
is not at all an issue; if they're making profits at the expense
of growth down the road, they're going to be destroyed.''
''They're big problem is that they're a Canadian company,
they're facing lower valuations, lower market cap.''
''We became involved in 1997. The company was in pretty bad
shape in '97, having gone public in '96. The company was
basically on its last legs. They relied on us for
strategy...Raised about C$34 million and did four rounds of
financing.''
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