Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Data Race (NASDAQ: RACE) NEWS! 2 voice/data/fax: ONE LINE! -- Ignore unavailable to you. Want to Upgrade?

To: Judgement Proof.com who wrote (32833)	11/4/1999 2:06:00 PM
From: Doug Coughlan	Read Replies (2) \| Respond to of 33268

This overview of race which was put out by the people at Briefing.com today makes for some interesting reading. It was under "story stocks." Data Race (RACE) : 1 5/16 unchanged (volume 57,000) Data Race gives an example today of why chasing rumors is extremely risky. Data Race came onto the scene because of they filed suit against Lucent (LU), claiming Lucent's Virtual Telephony product infringed on Data Race's BeThere! patents. BeThere! is basically a forwarding device that routes email, phone calls, and faxes to remote locations. Like all good sounding rumors, this one looked like it might have merit, at first. If royalties had to be paid on Virtual Telephony, it would be a bonanza to RACE. The rumor gained momentum slowly, but then took off. Data Race went from being a complete unknown (traded 25,000 shares at $1 3/8 in September 98, before the lawsuit), to wildly volatile. On January 7, 1999, RACE traded 2.8 million at $5 1/4. On 1/19/99, it traded 1.2 million, closing at $9. At that time, the rumor was based on RACE winning its lawsuit. The rumor resurfaced in May, when RACE had fallen to $4, but this time, the rumor was Lucent was buying RACE, because LU was going to lose, and the agreed upon price was $8. RACE went back to trading 2.2 million shares, closing at $5, on May 14. This was one of those rumors that was flying everywhere: chat rooms, institutional trading floors, investment banking circles, it literally was a flood of phone calls. But then, all went silent. Weeks went by without any announcement. The stock drifted lower and lower on lower volume. Then, last Friday, RACE announced that Lucent had won the lawsuit(although Lucent lost in its attempt to get RACE's patent rendered invalid). There was no patent infringement to begin with. Today, RACE announces earnings, and there is no other way to put it: they stink. Revenue dropped 50% year over year to just $536,000. Not only does Lucent not infringe on BeThere!, no one wants to buy BeThere! RACE did $19 million in revenue just three years ago. They are now losing $2.3 million a quarter, and have just $6.3 million in the bank. They have only six months to live, basically, without drastic turnaround action. The lesson? If you buy on a rumor, sell on the spread of the rumor, not on a hope that it is true.