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

To: Tassi who wrote (63710)	1/18/2000 2:10:00 PM
From: DO$Kapital	Respond to of 108040

INTA INFO from 12-Jan-00 00:03 ET....note esp the last sentences in both first and last paragraphs...... [BRIEFING.COM - Damon Southward] Revenues plummet 38% to less than $1 million per qtr... Net losses for the first nine months of the year jump more than four-fold to $5.7 million... The mini-cap company's shares sprint 80% over a period of three weeks, as speculators pump the stock in chat rooms and momentum players dodge in and out. Sounds like an ideal short candidate... Not in this market... This is a market that prefers a good story to fundamentals, values hype over hard assets, and reacts more favorably to stock splits than stock buybacks.... Ontario, Canada-based Intasys Corp (INTA 8 3/4) is one of those companies looking to bring its story to investors. Its tale is one of riches to rags to... Well the final chapter has yet to be written. The developer of billing software for use by the wireless telecom industry fancies itself an Internet incubator. Over the past six months, the company has made investments in business-to-business information technology firm TEC Technology Evaluation.com Corp and an Internet search engine that goes by the name of Mamma.com. But the deal that INTA hopes will put it on the map is a $5 million investment in interWAVE Communications International (IWAV). The Redwood City, CA-based designer of wireless communications systems agreed to help incubate Intasys' Internet incubator efforts by selling INTA a stake in the company at VC prices. Intasys acquired 715,000 preferred shares of interWAVE (each convertible into one common share) and common share purchase warrants which entitle the company to purchase a further 715,000 common shares at just $1 each. Under terms of interWAVE's IPO registration statement, the company is planning to bring its deal out between $8 and $10 per share. By the time road show has closed and final subscriptions to the deal have been taken, the IPO price should have moved up to around $14. Assuming the stock doubles from this price, INTA's 715,000 preferred shares would sport a value of about $20 million. Toss in the the warrants to purchase an additional 715,000 shares at $1 each, and INTA's $5 million initial investment is suddenly worth almost $40 million (excluding tax ramifications). Even though company has hit the jackpot with interWAVE, Intasys is still left to account for more than $100 million of its $144 mln in market-cap. Since INTA spent much of 1999 trading between $3 and $5 per share, we'll conclude that the market placed a value of $4 per share or $65 million on its billing software business, leaving $40 mln or so in market-cap for which to account. Should either TEC Technology Evaluation.com (in which Intasys holds a 35% stake) or Mamma.com (a 69.1% stake) have the good fortune of making it public, the market-cap disparity would quickly be erased. From a trading perspective, we're concerned that the stock is a little over extended near-term following its 84%, three-week march. However, with the interWAVE initial public offering tentatively scheduled to price late-January/early-February, would not expect any near-term weakness to last for more than a few days, with a major spike in the stock occurring over the week or so leading up to the IPO. Once the deal hits the market, would advice taking cover. From Creative Computers (MALL)/Ubid (UBID) to Winfield Capital (WCAP)/Cyberian Outpost (COOL), the parent company (or in this case venture capital company) has a history of plunging into free-fall after the IPO. In Creative Computers' case, the stock spent the next 9 months filling its gap, eventually bottoming out at $5, or down 92% from levels reached in the hours leading up to Ubid's initial public offering. But as advances in MALL and WCAP demonstrate, once momentum investors sink their teeth into these issues, valuation becomes a secondary thought. This is certainly a stock to keep on the radar screen over the next several weeks. Under the right conditions (e.g. at least a lukewarm market and a few media mentions), the stock could make a run into the mid-teens or higher.