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To: John Rieman who wrote (26723)	12/16/1997 3:44:00 AM
From: Ed's Head	Respond to of 50808

John Rieman: I say make them nasty old swashbuckler's walk the plank. It seems the punishment should fit the crime; the crime is dastardly indeed for these pirate's hinder me from making money. Perhaps a swim where the Great Whites roam abundantly would be in order! 18 disk on a dead man's chest, Yo Ho Ho and a bottle of rum! good luck c-ya!

To: John Rieman who wrote (26723)	12/16/1997 7:34:00 PM
From: DiViT	Read Replies (1) \| Respond to of 50808

India: Pentafour Communications: A dampening message 12/14/97 Business Line (The Hindu) Copyright 1997 Business Line A PART of the Chennai-based Pentafour group, Pentafour Communications (PCL) caters to a variety of telecommunication-related activities. The flagship company of this group is Pentafour Products which, incidentally, has been the target of numerous complaints about non-payment of dividends to its shareholders. With this major dampener, PCL has also fallen short of the projections made at the time of the public issue in December 1995. It currently trades at Rs. 29.25. Though the stock touched a high of Rs. 36 in May, the possibility of capital appreciation beyond this point seems dim. Pentafour Communications basically caters to the needs of telecommunication activities, which include providing product support, maintenance and offering value-added communication services, technical training for telecom professional and development and marketing of communications system software and networking. To part finance the above activities, PCL came out with a public issue of 12.75 lakh shares of Rs. 10 each aggregating Rs. 1.27 crores during December 15, 1995. The promoters' contribution after this issue was around 75 per cent. On the financial front, in the two years till 1996-97, PCL has fallen short of the projections made at the time of the public issue. Though the first half of 1997-98 seems considerably better, how far it would help improve the stock's performance across the bourses is the question. For the first half year ended September, the turnover increased to Rs. 18.24 crores from Rs. 7.63 crores in the corresponding previous year against the projected turnover of Rs. 32.15 crores for the full year 1997-98. The post-tax earnings for the first half is Rs. 3.71 crores against Rs. 1.53 crores in the previous half. The 1997-98 earnings projections is Rs. 6.53 crores. On an equity base of Rs. 5.10 crores, the annualised per share earnings is now Rs. 14. Though the proposed merger of Pentafour Communications and Pentafour Software and Exports seems to be a logical decision, the modalities of this merger are yet to be finalised. The proposal was mooted a few months back and further announcements are yet to be made. Until they are, the stock can safely be expected to be dampened by the uncertainty arising from the proposal. There appear to be a few synergistic benefits to the merger. Like Pentafour Software, among various other things, PCL also develops communications software. It has developed voice communication software for NEC Corporation of Japan, which enables voice communication between PCs, which are a part of a Local Area Network (LAN). This voice communication can also be used over the Internet. This device, used over the Internet, can substantially lower the cost of long-distance calls. PCL also has plans of entering the Internet content provider business, specifically in association with large retail chain stores. Among the various alliances of the company is one with Detecon, a subsidiary of Deutsche Telekon. This is basically to help in the training programme that the company is offering to the telecom professionals. The company also has a tie-up with Divicom of the US for the supply of satellite uplink equipment and set top boxes. The company has a tie-up with John Brown Associates (JBA) to distribute its ERP solution 'Systems 21' in India. For the four-line pagers in the Penta Page brand name, the company has a tie-up with Prodart, US, who supply the hardware. The Chennai-based company signed an agreement with Simoco International Group to offer Simoco products as a part of its solutions. Simoco is the supplier of communication based tools, products and systems. It manufactures a range of networking equipments such as multiplexes, satellite equipment and front end communication systems. The company's performance for the period ended March 1997 fell short of the projections made at the time of the public issue, by a wide margin. The turnover for the period ended March 1997 was Rs. 18.85 crores against the projected Rs. 20.41 crores. The operating profit margins are at 23 per cent, falling short of the projection of 35 per cent. The post-tax earnings are at Rs. 3.49 crores against the projected Rs. 4.37 crores. The earnings per share were Rs. 7 against the projected Rs. 8.58. This variation in the projection could be attributed to the delay in the implementation of projects relating to basic telecom or the cellular service operators. The company has declared a dividend of 23 per cent for 1996-97 against the projected 30 per cent. It has expended around 5.36 per cent the turnover towards for the research and development, a sum of Rs. 1.01 crores. The reserves of the company stand at Rs. 3.22 crores against the projected Rs. 3.91 crores. The current market price of Rs. 29.25 discounts the annualised per share earnings 2.1 times. Though the company's performance in the first half of 1997-98 was reasonable, the dampeners outweigh this. The stock has traditionally suffered from a rather low valuation, which is the case with other stocks in the group as well. Also, PCL has fallen short of the projections that it made at the time of the public issue for 1995-96 and 1996-97. In 1997-98, whether it sustains the first half performance over the rest of the year, remains to be seen. But an improvement in the performance of the stock across the bourses, will largely hinge on the eventual outcome of the proposed merger and an improvement in the overall stock market perception of the group. In the near term, the price is likely to remain rangebound.