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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: If only I'd held who wrote (35934)	12/1/1999 8:23:00 AM
From: swisstrader	Read Replies (1) \| Respond to of 108040

VONE article for what its worth: Commentary : Herb on TheStreet Why Investors Buying Into V-One Should Look Beyond Yesterday's Hype By Herb Greenberg Senior Columnist 12/1/99 6:30 AM ET All a company has to do these days, to become one of Cramer's Red Hots, is to somehow align itself with Red Hat (RHAT:Nasdaq), which makes software for the Linux operating system. Which is just what V-One (VONE:Nasdaq) did yesterday when it announced the "availability" of new Internet security software that it says has "compatibility with Red Hat." The news caused V-One's stock to leap 279%, giving it a total market cap of $230 million. That's 279%, or an additional $169 million in market value, for a company that did little more than issue a news release! If that doesn't underscore the insanity of how far this momentum mania has gone, maybe a peek at V-One's fundamentals will. (Like fundamentals mean anything, right?!) This, after all, is a company whose revenue last quarter fell by roughly half from a year earlier. But wait, there's more: This is the same V-One that hasn't made a dime since going public in 1996, and as of last quarter had a deficit of $36 million. This is also the same V-One whose independent auditors, PricewaterhouseCoopers, last December issued a "going concern" opinion because it didn't meet the Nasdaq's $4 million tangible net asset requirement to stay on the Nasdaq National Market. The company was then relegated to the Nasdaq SmallCap Market, but was warned its listing there was contingent on showing net tangible assets of $6.3 million. (Sorry, can't explain why SmallCap requires more than the big-cap.) That "going concern" opinion apparently didn't go over too well because at the end of last quarter V-One fired PricewaterhouseCoopers and hired Ernst & Young. No reason was given, but such changes often occur after a company gets an unfavorable opinion from an auditor -- and they're not generally considered a good omen. But wait, there's more: To get its net tangible assets up to snuff, so it could remain listed on any Nasdaq market (and to help it stay in business), the company issued 3.3 million warrants to several undisclosed investors, via a private placement, to buy V-One stock. The warrants can be converted at any time once the price rises above 2 5/8. Such a deal: Not only did the stock rise high enough yesterday for those warrant holders to cash it all in for a tidy profit, it did the same thing after a similar Red Hat-related announcement two months ago, only to lose all of that gain. Any bets on history repeating itself? V-One's appointed spokesman didn't return my call.