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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (59040)	1/17/2002 10:07:14 PM
From: StanX Long	Respond to of 70976

Glimmers of hope January 17, 2002: 4:28 p.m. ET A lot of busted tech stocks are all but done for. But there may be a chance for some, as Kana Communications latest stand shows. By Adam Lashinsky money.cnn.com NEW YORK (CNN/Money) - Take glimmers of hope where you can get them. In the case of Kana Communications, the badly beaten down Silicon Valley software company, its ray of sunshine is its board's decision not to go through with a financing deal that's lousy for its shareholders. Kana's willingness to tell a major venture capitalist -- Technology Crossover Ventures -- to take its investment and shove it is one credible sign that there's life yet in the technology market. Kana was one of those bubble-era highfliers that was never profitable and arguably never should have been public. But that didn't stop its stock from soaring, enriching its high-profile Silicon Valley investors, including VC firms Benchmark Capital and Draper Fisher Jurvetson. By late last year, however, the shares had fallen below $1 as losses mounted. Menlo Park, Calif.-based Kana burned through $19 million in the third quarter alone, leaving it with just $52 million in cash and other short-term investments. It was at this point that Kana turned to Technology Crossover Ventures to do an onerous PIPE deal, a private investment in public equities, detailed in this column last month. As noted, TCV agreed to invest up to $45 million in Kana in a convertible note that would give TCV "liquidation preference" should the software maker go belly up. It would also give TCV up to a 66 percent discount on Kana's stock price, depending on when TCV buys shares. At the time, Kana said it badly needed the cash, especially because its competitors were spreading gloomy stories about Kana's ability to survive. According to its SEC filings, Kana even granted TCV warrants to buy its 3.9 million shares at $10 per share if the convertible notes deal fell apart. (Kana conducted a reverse 1-for-10 stock split on Dec. 13; its shares closed Thursday at more than $21.50.)