O.T.???
National Scientific Attracts Brokers' Interest
By ANNE BRADY Of DOW JONES NEWSWIRES
August 24, 2000
PHOENIX -- National Scientific Corp. (NSCT) Chief Executive Lou Ross says that almost every day, he gets calls from brokers representing potential investors willing to sink millions into his small company.
And stock brokers confirmed in conversations with Dow Jones Newswires that although they may be precluded from recommending over-the-counter Bulletin Board stocks to their clients, customers have come to them wanting to add National Scientific shares to their portfolios. National Scientific is the subject of much discussion every day in online chat rooms, which may account for the unusual amount of interest in a Bulletin Board stock.
Some brokers and an analyst said they have invested in the company themselves. One broker at a major brokerage firm who has a personal stake in the company said he really wishes he could go to his clients about the stock, instead of having to wait for them to stumble over it on their own, often at the NSCT Ragingbull.com message board. He and others compare National Scientific to Rambus Inc. (RMBS) in its infancy.
National Scientific, like Rambus, has developed a computer memory-chip technology. However, National Scientific has patents on four other technology products as well, and is developing a variety of technologies.
"Some of the technology has got to be marketable," said the investor/broker, who is precluded from publicly putting his name on an endorsement of a stock for which his company doesn't have analyst coverage. "It's sort of a mutual fund of technology, an incubator. The odds of success go up with diversification."
Many Patents, But No Revenue
However, unlike Rambus, National Scientific has no revenue.
Ross, in an interview with Dow Jones Newswires at his small office in a plush, shared executive suite space in Phoenix, maintained that he has plenty of cash on hand to finance his multi-pronged plan to generate revenue, and more money coming in, part from warrants coming due. For that reason, he said he has turned down investors who want to invest through a private placement.
"I just say we don't have a need (for cash) right now," said Ross. He said brokers have contacted him representing clients "who have offered $10 million to $20 million at a time, but that would mean a lot more shares outstanding." Brokers reached couldn't confirm that.
"What I say to the brokers is, 'If you find a company that's underperforming in electronics and bring them to me, then I may want some' " money from new investors to acquire it, Ross said.
His immediate plans, he said, are to: enter into one or more "joint ventures" with other companies that include licensing his company's technology; apply to list his stock on the Nasdaq small-cap index; get financial records in place for the first annual shareholder meeting, scheduled for October 28; hire a marketing manager and announce the hiring of a new president; and staff up his new Silicon Valley research and development facility with top-notch talent.
CEO: Company Would Consider Takeover
That San Jose operation, set to open next month, may provide the added bonus of making National Scientific an attractive takeover target, a prospect Ross isn't adverse to entertaining, he said.
"Sometimes good people is what (an acquirer) wants. I have a reputation for (hiring away top) people," said Ross. "It (the sale of the company) could happen to a bigger company that sees the upside, the potential...but I don't know what the price would be."
Last week, National Scientific announced it had received its long-awaited patent for its TunnelMOS, or TMOS, memory product chip. This computer memory is said to be faster and more affordable than conventional SRAM (static random access memory) and CMOS (complementary metal-oxide silicon) and to take up less space in the die area.
Broker Nelson Cheung at Dynamic Mutual Funds in Toronto, Ontario, wrote in an e-mail to Dow Jones Newswires that National Scientific is "an interesting and attractive company because their products, especially their semiconductor chips, target an enormous market."
Broker Admits To Getting 'Antsy'
Some brokers were less enthusiastic. One described himself as "antsier" than his clients about the company's lack of revenue, although he said the company has patents on "phenomenal technology."
Broker Dave Anquist said he has been studying the company on behalf of interested clients and has advised them to wait until he can learn more about the principals. "I'm still digging," he said.
Ross formerly was chairman and chief executive of the Malaysia operations of Intel Corp. (INTC). Last month, National Scientific announced the hiring of a new chief operating officer, James Upchurch, who was vice president and general manager of Lucent Technologies Inc. (LU). That hiring has been heralded by investors.
"I see that as a real positive," said investor Rosemary Tienken of Phoenix. She bought in two years ago when National Scientific was a penny stock. "I think they're well ahead of their time."
Last March, National Scientific stock traded as high as $19.13 a share, as speculation about the potential for TMOS fueled a run-up. Today, investors are taking a more cautious approach. The stock closed Wednesday up 16 cents at $6.50.
Other National Scientific technologies include a transistor, an amplifier (for electronic products requiring some level of power increase), an inductor (for use in wireless devices and modems) and a resonator. Ross said he also wants to develop fiber-optic technologies and sensors.
Hopes are running high among investors that there will be at least one revenue-generating contract in place before the shareholder meeting.
-By Anne Brady, Dow Jones Newswires; 602-258-2003 |
