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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (1354)	7/6/1998 5:58:00 PM
From: dumbmoney	Read Replies (1) \| Respond to of 2506

BASEA ran up today on apparently no news. Check out the intraday graph. Things that make you go 'hmm'...

To: Q. who wrote (1354)	7/6/1998 7:56:00 PM
From: chester lee	Respond to of 2506

Posted at 11:18 p.m. PDT Saturday, July 4, 1998 Objective Communications in search of an objective BY ADAM LASHINSKY The plight of Objective Communications Inc. (Nasdaq, OCOM) is a good reminder that if there's no substance behind the sizzle, investors will get burned. Objective, as noted here eons ago -- in October -- is a Portsmouth, N.H.-based company that aims to sell videoconferencing systems. That Objective doesn't have any earnings isn't that noteworthy. Neither do Amazon.com Inc. (Nasdaq, AMZN) and Excite Inc. (Nasdaq, XCIT), worth a combined $8.6 billion last time the markets closed. But fledgling Objective also doesn't have any revenues, and didn't have any in October when it decided to offer 2 million shares of its already publicly traded stock for about $30 a share. Never mind the lack of sales and an auditor's warning on the company's ability to stay afloat. Objective decided to turn to the public in a situation where similar companies once would have solicited venture capitalists or even commercial banks. And the public responded. Despite having cut the offering size to 1 million shares, and despite the stock price falling to around $23, Objective's follow-on offering raise more than $20 million. Completing the deal was a feat for the small company's blue-chip investment banks, NationsBanc Montgomery Securities Inc. and BancAmerica Robertson Stephens. Respected analysts at both investment banks -- Bruce S. Carlsmith at Montgomery and Paul Johnson of Robertson Stephens -- issued ''buy'' recommendations shortly after the offerings, ratings that remained unchanged last week. Everything else changed, however, for Objective. The company revealed Thursday it won't record any revenue for the second quarter because its products aren't ready yet, sending the stock down 28 percent to $5.44. It also said it will fire 42 workers, a third of the workforce, and bring on an interim CEO to replace ''founder and technical visionary'' Steven A. Rogers, who will become chief technology officer. Rogers is the same executive who defended the company's secondary stock offering last year by arguing that other companies -- like Internet concerns -- have raised public capital without long earnings histories. ''Our company should be looked at in the same light as other companies with good prospects,'' he said then. ''I think there is quite a bit here in terms of intellectual capital.'' Intellectual capital perhaps, but not much of the other kind. In March, the company had $8 million in cash, but was going through about $5 million a quarter. It also had $6 million in inventory, which it says it can borrow against to raise additional cash. Objective announced in May an $8 million private placement with an unnamed investor. Last week it said it had sold another $2.5 million in convertible debentures (which would dilute existing shareholders if converted) and might borrow more money from directors and officers to raise more dough. Despite the stock's drop, the burned investors and the scramble for cash, Objective remains upbeat, saying it will meet customer expectations in the third quarter. CEO Rogers -- to be replaced shortly -- allows in a statement that the company is confident ''there are no unresolvable technical issues.'' He didn't return a phone call Thursday. So where were the analysts who were supposed to alert clients to the coming disaster? Robertson Stephens' Johnson wasn't available Thursday. Montgomery's Carlsmith, plainly peeved by Objective's downturn, points out that although he maintained his ''buy'' recommendation on the way down, he noted in a February report that there were serious questions about the company's revenue recognition and its practice of recording production costs as research-and-development expenses. But it didn't take an MBA to know that an investment in videoconferencing -- a perennially not-quite-there field -- was a risky proposition. ''There are 20 companies that claim to have the answer,'' says Elliot Gold, editor of the Altadena videoconferencing newsletter TeleSpan. ''I am not surprised (by Thursday's announcement), and if they recognize any revenue over the next year, I will be surprised.'