Here is something I spotted on the Raging Bull board (which is difficult amongst all the meaningless posts !!). It gives an excellent review of USVO's plans, gleaned, apparently, from meetings/calls with Ed Molina himself.... (Long post though !)
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Finally got through today and spent another half hour or so going through USVO biz plan. Below is my own interpretation of company comments.
Let me say that the company has a strong goal to be NASDAQ listed by year-end, so comments are likely coloured by this fact.
Patent: "compressed video through a switched network"
One fee missed during company re-org. When new management noticed, patent office was contacted and USVO legal counsel is assuring management that the patent is intact.
USVO has recently received a patent in Europe using the same wording, and has patents pending in Australia and Japan.
Company does not plan to enforce the patent legally until they are an industry force and have the resources to devote to a battle. Their opinion is that the legal entitlements under the patent are not diminished through time because of a failure to attempt to enforce compliance today. The time and choosing of the battle is theirs. They know that MSFT and RNKS know that they exist and have chosen to ignore the patent due to the company's position in the marketplace.
Patent has no current commercial value to them (as they can't afford protracted legal battle) and so they have chosen to focus instead on generating sales and cash flow.
Worst Case: They lose the patent and are forced to compete based on client service and solutions.
Wavelet Compression:
They have non-exclusive ownership of technology. They are not licensees. They have a proprietary "flavour" that they feel is superior to other wavelet solutions. There are no acknowledged plans to pursue patents based on their customized technology.
Partners:
SeaChange:
Uses NT servers to provide the feed content to clients of USVO.
UUNET:
Portal with UUnet is scaleable and can support extensive client demand. Once they are on the backbone, they can support a number of facets of the business plan. Also, other areas of MCI/Worldcom are now calling on Molina re: the technology and it's application in their specific areas. Apparently a large number of WCOM employees are now shareholders of USVO. Go figure.
Educational Libraries (3 major ones signed):
Work to encode their existing libraries as well as new content. No revenue from this. A partnership under which USVO provides technology, Libraries provide content. Revenues split roughly down the middle when content is accessed from server.
Merging Rivers
Ad content. Streaming video commercials on internet sites. 3 minute video clips downloadable in seconds using wavelet compression. Advertisers like downloaded files because of longer shelf life (i.e.. consumer must actually delete the file from the desktop). If ad is catchy, consumers may keep it on drive to be reviewed time and again. Advertisers will pay big bucks for desktop real estate.
Streaming video would run from banner style ads, but not download to surfer's computer. Short life, but higher impact than cheesy banners currently trolling for customers.
Revenue targets must be hit by Merging Rivers executives to earn real compensation. A number of company's have already expressed strong interest to have ad's prepared. Expect some deal announcements here soon. Expect this to be a very busy channel for USVO.
BIG potential with this side of the business.
Motion Inc.:
Designs web sites, and ad content for USVO clients. Merging Rivers sells a campaign and Motion Inc. could do the design and coding of the actual ads. Also do original educational content and corporate training.
Principal Markets:
Education: (Market size: $30B)
Sell the servers, bundled with content to boards,universities, annexes and other learning center. Also sell bandwidth if it is not currently in place. Revenue from sale of hardware, bundled content, bandwidth. Followed by upgrades and updates of all three. Additionally, royalty income each time a file is accessed.
Also a strong possibility: Revenue from corporations who purchase space on server. i.e.. McDonalds buys servers for school, and has an ad made and placed on server that plays prior to the accessing of any or certain files. McDonalds gets the target market, the school gets the educational technology, kids get the education and USVO gets the revenue from hardware sale, content bundle, McD's ad design and digitizing, and finally, file access counts.
Internet Advertising (Market size: $100B)
See Merging Rivers section above. You get the picture. Huge opportunity with highly compressed video format to provide quickly downloadable files that have staying power on downloaders desktop. Unlike banner ads which are largely unmemorable and a nuisance.
Streaming video ads will eventually replace crude banners if USVO has it their way.
Corporate Training:
Design of digitized training content. Also server technology for entire enterprise (sale of server, content, and bandwidth if needed), individual offices, or UUnet portal will house corporate files. Revenue comes from design and digitizing of content, Flat fee for file access purchase to a specified number, then per access charge thereafter. Files can be up for short periods of time, or form a digitized resource library (lots of application for something like this in the banking system).
Video on Demand (Consumer)
Video stores, cable co's television networks, etc. digitize their catalogue of films and broadcast content and users stream it into the home when they are ready to consume. Plenty of advert potential here too, don't you think. This market is more distant, due to lack of integration of TV, Computer and telecom technology. But it is a valid target market.
Competition:
RNKS is largest, but is not a direct competitor. They are chasing the broadcast market (last one I mentioned), and if you check the product, you'll notice that it is not "broadcast quality". MSFT is a large content provider, but again (so far) in different markets. There are a number of other small companies like USVO chasing this market, but none I'm aware of has a significant piece of the markets USVO is chasing. Translation: probably room for everyone in this market.
If patent is enforceable or damages forthcoming for years of infringement by others, USVO stock price could be huge. Very Long Shot, I think.
Miscellaneous:
Conference in NY. Panel and attendees (possibly press) will see the VoD technology. Gist of Kinnamen's presentation will be to promote USVO technology. So anyone attending that presentation will definitely gain exposure to USVO and it's technology.
USVO does not have a booth in an exposition. This doesn't surprise me as the expos cost quite a bit of dough.
Financing. One more private placement likely at $1.50. One million shares. It will give them enough cash to make it through to revenue stream. Right now, just over $300K in treasury. Jesus, is this possible for a company with a $100MM plus market cap?!
Employees. Eight full-time. Up to 30 consultants. No lack of willing consultants in the talent pool when demand accelerates.
NASDAQ and stock price. Among other things, a $4 stock price required. When pressed, one year out can see something between US$5 and US$8. Told me that I should be accumulating more stock at these prices.
Revenues. $5-$10MM for fiscal 1999. Won't go out on a limb for next year. Go figure. I will keep pressing on this one. Margins should be excellent, although it's too early for gross or net figures.
News. Strong stream of releases coming, apparently. By August, should be ready to go with UUnet portal and widely based public access to streaming video demos. Hopefully, we see something out of NY by Thursday.
Porn. Fuggedaboudit!! Won't sully reputation in education market for it. Ed Molina wants technology to be used as a social good. He should definitely spend a weekend reviewing porn site revenue numbers.
Summation:
Feeling better about this, Ed. Today, I got a much better sense of what they are trying to accomplish. Markets are broken out, technology and partners are more clear, and deal flow is apparently very strong. |
