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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Zebra 365 who wrote (12213)	7/28/1998 1:33:00 PM
From: AlienTech	Respond to of 23519

Its a dog eat dog world.. CYBR was 3 something a few weeks ago, now at 9.. Reminds you of any other company you know? Read near the end.. To: +Diony (287 ) (Trial Member) From: +MHH (Trial Member) Saturday, Jul 18 1998 12:30PM ET Reply # of 300 I feel good about shorting even more. The writing is on the wall and even a Motley Fool Knows it. >>So who will eat their words first?<< The Daily Trouble - A review of a company whose stock price has been cut in half within the last year. Jul 17, 1998 CyberMedia, Inc. (Nasdaq:CYBR - news) Phone: 310-581-4700 Website: cybermedia.com Price (7/16/98): $5 7/16 HOW DID IT FIND TROUBLE? CyberMedia has been a disaster. Somehow, that name always sounded a little too... cyber to end up as anything but a disaster. But this former rose of a service and support software firm would smell just as putrid by any other name thanks to reported sales that got ahead of actual ones. After flowering to $33 last November, this one-time Wall Street sweetheart has turned into a bouquet of trouble that only a plaintiff's attorney could love. For the first nine months of 1997, the company seemed absolutely wired, with earnings blowing past estimates and sales rising 162% to $59.4 million. The stock soared, but the third quarter balance sheet suggested something artificial to this rush. While September quarter sales zoomed ahead 257%, accounts receivable shot up 363% to $25.1 million. Distributors and resellers owed CyberMedia for more product than the firm claimed to have sold during the period. While many vendors pump up inventories going into the holiday season, CyberMedia appeared to have a ton of inventory in the sales channel as products just weren't flying off actual store shelves as fast as the firm's income statement suggested. That was a red flag! The stock began to register this concern, but management took its time fessing up. On January 29, the firm reported a 21% jump in revenue, but EPS of just $0.01 versus estimates of $0.19. Receivables had been cut to $19.9 million but mainly because the allowance for sales returns and doubtful accounts had been doubled. Even that wasn't enough. On February 9, CFO Jeffrey Beaumont resigned. A month later, CyberMedia said it would have to reissue its fourth quarter earnings statement, increasing its fourth quarter return reserves by $6 million to $15.7 million. Management also projected that first quarter sales would come in around $5 million to $8 million versus $16.5 million for the year-ago period. And, oh yeah, CEO Unni Warrier also resigned. When a rose includes so many thorns, investors are lucky to get rid of it without bleeding to death. BUSINESS DESCRIPTION CyberMedia develops automatic service and support software products for Windows-based PCs. Its lead First Aid utility (75% of FY97 sales) detects and resolves software conflicts and other problems. Other products include UnInstaller (which deletes unwanted applications and files), Guard Dog Deluxe (Internet firewall security software for individual PC users), and Oil Change (which can automatically find and install software "patches" or updates on the Web). These utilities allow users to solve basic software problems without recourse to costly and sometimes nonexistent tech support services. In December, CyberMedia also launched the Super Server Repair Engine for the corporate market. Competitors include Network Associates (Nasdaq:NETA - news) , Symantec (Nasdaq:SYMC - news) , Quarterdeck (Nasdaq:QDEK - news) , and SystemSoft (Nasdaq:SYSF - news) . Insiders own 3.4 million shares, about a quarter of the company. FINANCIAL FACTS Income Statement* 12-month sales: $59.4 million 12-month income: ($29.1 million)* 12-month EPS: ($2.34)* Profit Margin: N/A Market Cap: $76.4 million (*Includes one-time acquisition charges.) Balance Sheet Cash: $22.5 million Current Assets: $36.8 million Current Liabilities: $18.5 million Long-Term Debt: $0.3 million Ratios Price-to-earnings: N/A Price-to-sales: 1.3 HOW COULD YOU HAVE SEEN IT COMING? Companies in hypergrowth eventually overestimate demand. An investor can often spot this trouble by looking for a build-up of inventories or receivables relative to sales. Since managers are often just too shocked or embarrassed by the obvious sales slowdown to admit there's a problem, investors should be biased toward the "bail now, ask questions later" approach in these situations. What's surprising about CyberMedia is that the stock actually rose significantly in the weeks following the CFO's resignation. Though management changes may prove useful in the long term, they're almost always a sign that things will get worse before they get better. And worse they got. WHERE TO FROM HERE? First quarter sales came in at just $4.7 million, worse than the company warned on March 12. CyberMedia also had $3.7 million in inventory at the end of March, or nearly a whole quarter's worth of sales. However, the company also had about $1.60 per fully diluted share in cash. Also, accounts receivable had been sliced to $5.2 million from $19.9 million at the end of December, due largely to collections, the company said. In late April, Kanwal Rekhi, previously an executive VP and board member at Novell (Nasdaq:NOVL - news) , officially took over as CEO after serving as Chair since February. Former Novell CFO James R. Tolonen has taken over as COO. These management changes seem constructive -- especially given that in May, these two fellows collectively bought 250,000 shares on the open market at $6 3/8. Still, they'll need some time to turn things around. And there are sure to be distractions from the bevy of shareholder lawsuits and from the company's own copyright infringement lawsuit filed in February against Symantec and ZebraSoft. On the other hand, CyberMedia is using the launch of Windows 98 to publicize its UnInstaller software, part of which is featured in the Plus! 98 utilities. And a customized version of its utilities package will also be factory installed on Gateway (NYSE:GTW - news) computers for at least the next year. Turnaround investors should ignore the ear nings estimates and focus on CyberMedia's actual results over the next few quarters. Yet given that SystemSoft and Quarterdeck have basically bitten the dust in recent years, CyberMedia may not prove turnaround material. Perhaps only the big boys like a Network Associates -- the McAfee Associates/Network General combo -- have a fighting chance against the inevitable encroachment of Microsoft (Nasdaq:MSFT - news) in this entire utilities niche. -- Louis Corrigan

To: Zebra 365 who wrote (12213)	7/28/1998 3:04:00 PM
From: John W. Andrews	Read Replies (1) \| Respond to of 23519

Zebra..thank you for the informative post!!!!!!!! Alza must be one of the parties...since Vivus ws a spin-off years ago....it is becoming clear that they will be the purchaser... IT is a good fit...and obviously the new employyee MAry is still pro MUSE____its in the bag and cards... People are so busy watching the market tumble today they didn't even bother to check on good old tiny VIvus.. Pizzaman