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Microcap & Penny Stocks : Zulu-tek, Inc. (ZULU) -- Ignore unavailable to you. Want to Upgrade?

To: Brady B. who wrote (11960)	8/7/1998 8:30:00 AM
From: Joe Copia	Read Replies (2) \| Respond to of 18444

This should give JT a woodie. Tuesday, March 17, 1998 Pitfalls in high-tech An executive warns of investing in high-tech stock without some research, writes KIRSTY NEEDHAM. NET BUSINESS An Australian automotive executive at the centre of a controversial takeover of Internet advertising company Softbank Interactive Marketing has warned of a "madness" in the US markets for technology companies more focused on driving up their share price than delivering a sustainable business. Ronald Meatchem resigned as the managing director of BMW Australia in 1993, having built the company up from a registered name in 1979. He said he became involved with technology companies after travelling to the United States last year to hear Intel's chief, Andy Groves, speak at a two-day car industry conference in Seattle. This month, Meatchem refused to comment to Wired News on his involvement in the January takeover of Softbank Interactive Marketing, regarded as the second-largest Net advertising network worldwide, by the little-known US company Zulu-Tek. Zulu-Tek's activities had come under scrutiny by the daily American news service operated by Reuters and Wired magazine. Now in Queensland, Meatchem told I.T. that he quit as Zulu-Tek chairman and CEO three weeks ago, choosing instead to concentrate on his software business, Automotive Technology Information Systems. Meatchem said he felt "uncomfortable" with his departure. But although his replacement was "still being worked out", he had no involvement in Zulu-Tek's current moves towards a reverse public offering in the US, through the NASDAQ-listed company, Enhanced Services. At its height, Softbank Interactive Marketing sold advertising space on an international network of Web sites including Netscape, Yahoo! and News Corporation's TV Guide. It was a division of the Japanese company, Softbank Holdings, and offices in Australia were set up after the purchase of Web Wide Media [a joint venture between OzEmail and Murdoch's BSkyB]. Despite its dominant position, Meatchem said Softbank Interactive Marketing was "pouring money down a hole", and its Japanese parent had almost given it away. The January 5 takeover by Zulu-Tek was first trumpeted in the US as strengthening Softbank's position in the online ad sales market. But Anthony Bertini, who was then managing director of SoftBank Interactive Australia and Asia Pacific, recalls that the Australian office was swiftly closed on January 12 following a telephone call from Meatchem in the US. A stream of key executives soon left the company's US and European offices. OzEmail, which still had a 7.25 per cent share in Softbank Interactive Marketing, wrote down its investment by $1.54 million, with OzEmail president David Spence saying the move to concentrate on the US market had limited its growth potential. Last month OzEmail said it was still waiting for more details on the takeover. This month's Wired News investigation questioned Zulu-Tek's motives for the takeover, and its subsequent conduct. The week before, Softbank Interactive Marketing competitor DoubleClick had successfully completed an initial public offering, becoming the first online ad network to be listed in the United States. But it was noted a constant stream of positive statements on Zulu-Tek's financial position, and rumours that it too would list, could not be backed up by audited filings. The Wired investigation was also critical of an Australian financier based in the US, Pattinson Hayton, who was named as behind the Zulu-Tek takeover. Meatchem said that he had no knowledge of Hayton's background before reading the Wired report, and could not comment on the allegations. He said he first became involved with Zulu-Tek after "an amazing coincidence" saw him meet Hayton in Los Angeles last year. "I got involved in the takeover of Softbank at the end of December," he said. "Last year Internet advertising in the US was worth $1 billion, progressing to $5 billion by 2000. "What we were basically looking to do was put together a platform of not only international advertising but other elements such as software development. We had specific projects on the go, but the critical issue was money." Meatchem said he came on-board as a management consultant to bring discipline to the company. BMW had been careful to amortise the cost of a new $2 billion product line over a period of time, and was rigid in development costs, he said. "But in this business nobody understands the costs, no-one keeps to the figures. There is new technology and ideas, but the discipline is not there. They had no idea what it cost to create an ad and maintain it. [Softbank] lost money in 1997 following a philosophy of being number one." Now, having left Zulu-Tek, he also commented on the lack of corporate governance in the US compared with Australia: "It was like Hollywood or show business. People are looking for the share price. There is a sort of madness in the stock exchange. People rush after high technology companies in the US, but if they sat down and analysed it they would have to have their head examined." The experience has not deterred Meatchem from his enthusiasm for IT. His Queensland company is developing PC-based software solutions for car dealers. Meatchem said few Australian CEOs were aware of the potential for technology to transform industry. The company is looking at kiosk applications for the Internet and smart card technology. Joe PTG&LI !!!