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Non-Tech : Turnaround Plays -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (139)	12/8/1997 8:21:00 AM
From: David Alan Cook	Respond to of 206

Basil Regan Increases Position in HNV from 6.60% to 7.93% during the last few weeks. He has been buying shares up to $2.50 . . . current close was $2.50 ( See recent 13D for details ) He has been buying almost daily . . . several hundred thousand shares bought this last month. TSSW . . . looking for increased revenues and its first profit in over 7 qtrs. 3 new products releaseed this qtr. PC-Cillin 3 and Checkit Version 5 and Checkit Pro selling well. TSSW reported revenue of about 1.4 million last qtr. If expenses stayed the same as the last qtr, TSSW would have to have an additional $713,660 in income. To achieve this rate, the company would have to earn: 958,905 ( Gross Profit ) / 1,443,255 ( Total Revenues ) = Profit Margin of 66% Thus: .66 times X = $713,660 X=1,081,303.03 in additional revenues. Using this estimate, TSSW would have to report revenues of at least 1,443,255 + 1,081,303 = $2,524,558 in revenues to turn a profit. Revenue Projections for TSSW's PC Cillin and Checkit Version 5: 1) PC-Cillin 3 ( 9,000 * 12 * $39.95 ) * .50 = $2.157 million Assumptions a) Retail stores at 9,000 b) Company avgs one sell a week c) Company receives only 50% of the revenues generated from each product. 2) Checkit Version 5 ( 6,000 * 6 * $42.00 ) * .50 = $756,000 a) Retail stores ast only 6,000 as I assume that all retail stores will not have the product in the 4th qtr b) Company sells only one product a week c) 50% revenues for each product. Thus using only PC-Cillin and Checkit version 5, TSSW has a very good chance of making a profit. This does not include Checkit Diagnostic which just made the top ten list and other products TSSW has. DC

To: Robert Graham who wrote (139)	12/8/1997 8:31:00 AM
From: Melissa McAuliffe	Read Replies (1) \| Respond to of 206

Bob,<I think we should first start with defining the different types of turnaround situations, and then selecting which one(s) we would be interested in making plays on given some basic criteria. Next, we then can define specific criteria that a stock> I think this is an excellent idea. Doesn't this somewhat go back to the issue of what caused the problem in the first place? e.g., a company that didn't meet earnings expectations but yet has growing revenues in a growing industry segment has different kinds of issues than a company whose revenues are decling along with eps. After writing this I realized that maybe we should start by defining what we mean by turnaround. I don't think a company has to be on death's door in order to be considered a turnaround. Maybe we have two things here 1)a company/stock turnaround or 2)a stock turnaround or 3)a little of both. IFMX falls into the first category and will probably take alot longer to turnaround than a company in category number 2. Again, this all depends on the reasons behind the stock price decline. I also think that defining the stock criteria later is a good idea becaus we don't want to be too rigid up front and miss some good opportunities. But I would prefer that we stay away from under $5 stocks and companies with either a)alot of debt or b) little cash. I would even forego my prior requirement that there be options if the opportunity was worth it. Though I still think options let you get some return on your money while you wait and/or offer downside protection. Though hopefully if we do this right we should be buying at the bottom or thereabouts unless something totally unforeseen happens. Melissa