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Technology Stocks : General Magic -- Ignore unavailable to you. Want to Upgrade?

To: Austin S. who wrote (3211)	8/3/1998 2:50:00 PM
From: ping quin	Read Replies (2) \| Respond to of 10081

Copy of Goldman, Sachs Report -> low risk, good reward! > * * Launches anticip. Portico svc;Expt. gradual roll-out; MO * * > > ******************************************************************** > *** > * Last week General Magic (GMGC) reported Q2 1998 revenues and EPS of > $91 * > * thousand and ($0.82) and launched Portico. In the qtr, GMGC > completed a* > * funding round that bolstered the cash position to $58 million. We > * > * expect the stock action to be less related to the reported financial > * > * metrics and more linked to Portico's product adoption and user > feedback.* > * With the company meeting its self-imposed deadline of the July 30th > * > * launch, the subscription revenue model for the service is likely to > * > * provide sequential quarterly revenue growth. > * > ******************************************************************** > *** > > Michael Parekh (New York) 1-212 902-8960 - NY Equity Research > > ==================== NOTE 1:35 PM August 03, 1998 > ===================== > > Stk Latest 52 Week Mkt Cap YTD Pr > Cur > Rtg Close Range (mm $) Change > Yield > --- ------ ------- ------- ------ > ----- > General Magic, Inc. MO 8.00 16-1 213.6 482% > 0.0% > > --------------Earnings Per Share--------------- > GMGC Mar Jun Sep Dec FY CY > 1999 FY N/A > 1998 FY -0.43 -0.82 > 1997 FY(A) -0.29 -0.25 -0.18 -0.34 -1.06 > > -Abs P/E on- -Rel P/E on-- EV/NxtFY LT EPS > Cur Nxt Cur Nxt EBITDA Growth > ----- ----- ----- ----- -------- ------ > GMGC FY NMX NMX NMX NMX NA X NA% > ====================================================================== > ===== > > * Along with the launch of the service there are several new focal > areas > for the company, in particular, the subscriber acquisition strategy > will > determine the overall revenue growth over the next few quarters. > To > date, GMGC has partnered with 52 resellers representing over 200 > regional areas and also offers customer sign-ups from its web site > (www.genmagic.com). GMGC has been working with its resellers in > anticipation of the launch and has set up incentive plans with each > vendor to grow subscriber count. The Portico service will be > offered at > multiple price points ranging from $20/60 minutes of usage per > month to > $150/1,300 minutes per month. In addition there is also a one-time > $50 > set-up fee. > > * While the company has stabilized its capital base for the next few > quarters, we expect limited financial risks during this time frame. > However, over the next few months we expect the company to > gradually > scale its servicing and support operations as it prepares for the > ramp. > In the nearer term, we expect the provisioning of the training > services > to be the primary gating factor to growth. > > * Over the next few months, the stock action will be driven by > adoption of > the service and overall customer response. While the rollout had > been > limited to 1,000 individuals in the beta phase, the final launch is > likely to provide further improvements in the service as a wider > group > of users experience the functionality and user interface. Assuming > a > moderate ramp up to a target rate of 500 subscriber additions/week > by > the end of 1998, GMGC could see revenue contributions in Q3 and Q4 > of > $100K and $500K, respectively. The overall burn rate of $9 million > is > likely to grow as well as new headcount in the services area is > added. > While these estimates might yet prove be optimistic, we are > encouraged > by management execution leading up to the launch and expect further > momentum as the scheduled advertising campaign is launched prior to > the > Christmas shopping season.