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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology -- Ignore unavailable to you. Want to Upgrade?

To: bob who wrote (5968)	6/19/1999 10:50:00 PM
From: JimC1997	Read Replies (2) \| Respond to of 18366

In my previous post I mentioned how news can impact a stock price by widening knowledge of the company's prospects. Last year there was a classic example of this, and since it involved Sony and a relatively unknown electronics company I thought it might be a good indicator of the potential effect an announcement involving Sony might have on e.Digital. Xybernaut is a small company (41 employees, '98 sales: $876 thousand) which holds certain patents for "wearable" (mobile), speech-directed computers. In September 1997 they announced that Sony would be the manufacturer of their computers. The stock traded up from a price range of $2.50 - $2.75 on 20,000 share average volume to a peak of $6.25 on volume of 3.2 million and 2.0 million on the announcement day and the following day, then began to slide back downward as the volume subsided in the next week. By December the stock was back under $2 and volume was back to about 20,000 shares. In mid-May of the following year the company essentially announced the same news (Sony to manufacture their product) but the press release had positive quotes from Sony Digital's president and the stock, with its volume already averaging over 1 million shares/day in the first two weeks of May, began to take off. It jumped from a close of $2.97 on 5/13 (1.7 million shares traded) to a close of $8.44 on 5/14 with 25.7 million shares traded and followed that with a high of $12.50 on 5/15 (closing at $7.00) on 26.5 million shares traded. The stock then settled in at a trading range of $5 - $6 on 200,000 volume for the next month. The primary differences between the two events were the quotes from Sony in the second press release and a mention on CNBC. (Subsequently XYBR has traded back down to about $3.25 because they have yet to deliver on the promise of the press releases.) If (big qualifier here) EDIG does announce a marketing agreement with Sony the impact could very well be comparable to the initial impact that the mid-May press release had upon XYBR. It conceivably could be greater, since I believe that e.Digital has far greater potential and more "name" partners than Xybernaut had and downloading music has more mass appeal than wearable computers. On the other hand, the EDIG story is perhaps more widely known because of the earlier IBM/Lucent/Lanier announcements and may have less of a shock impact as a result. The other big unknown is whether CNBC would note the alliance on the air. Their past practice is to not mention stocks (particularly bulletin boards) trading under $5. Let's hope that Sony cooperates and we have the chance to see which turn the story takes. Jim