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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Joe Copia who wrote (16547)	5/9/2002 5:11:40 PM
From: HeyRainier	Respond to of 18998

Hi Joe, Sorry for the untimely response. I'm hardly around SI, unfortunately. That's a nice chart. Hope you got a bite of ADSX on the way up. The optimistic technicians would say you've got to about $3.30 on that run. Watch out though, because the market's definitely more keen on taking extraordinary gains and making them into ordinary gains, or worse yet, ordinary losses. Enjoy it while it lasts. The grim reaper would gawk at those financials if it looked at it. This may be old news to you, but it fired PriceWaterhouseCoopers, its auditor, a while ago, and that's typically a sign that the company was more interested in aggressively pushing its financial picture than the auditor was comfortable with. That's usually the reason I hear auditors get fired (or they're crooks, like Anderson, both of which don't point to a positive picture). Also, PWC expressed concern about the company's ability to survive, causing their "going concern" status to be questioned. Also, the long-term idea of putting a chip into people won't fly. How would you feel if someone asked if they could put one in you so you could be tracked? Not likely. The financial picture doesn't look too hot. The company hasn't generated positive cash flows from operations since its inception, and it has been subsidizing that bleeding with more debt. That is not a sustainable proposition. Its cost structure is bloated; the company spends all its gross margin dollars alone on SG&A expenses, and then there's R&D, debt, etc. to still consider. Again, not a sustainable proposition. So, all I'm saying is that it would make sense to keep your stops tight, e.g. a quick moving average to catch more of the run and less of the fall. Good luck. Rainier