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Technology Stocks : Source Media SRCM -- Ignore unavailable to you. Want to Upgrade?

To: Sir Auric Goldfinger who wrote (1011)	8/24/1998 7:40:00 PM
From: Pluvia	Read Replies (1) \| Respond to of 3015

Open Letter To OGRU and Their SRCM Analyst Anthony Stoss Mr. Stoss: The stock is not down just because there is no news of a buyout, rather because there never will be a buyout... And because Management lied to the shareholders about the loss of business associated with the Brite & VNN purchase while insiders sold $20 million of stock... And because the company has $120 million of debt and no product that will produce enough revenue to pay even the interest on the debt... And because the company continues to lose customers... And because management will need to restate their financials and possibly lose their auditor and the opinion on the '97K, causing the stock to be halted, while the company and it's officers face numerous additional lawsuits... As a self proclaimed SRCM analyst - I'm surprised you failed to notice these things? Cheers - and have a nice day - Mr. Pluvia was short and he and all of his associates, operatives and field agents already did. All comments are the opinion of the author. All rights reserved ... Pluvia Securities Research "where reality rains"

To: Sir Auric Goldfinger who wrote (1011)	8/24/1998 7:46:00 PM
From: Pluvia	Read Replies (1) \| Respond to of 3015

Broadcast & Cable Story On SRCM... Dark times for Source's Brite idea Source Media takes write-down after talking yellow pages purchase proves a drain By Price Colman Source Media's acquisition of a "talking yellow pages" company was supposed to boost revenues at its IT Network division and provide capital for the Dallas company's cable-related ventures. Instead, the deal has turned sour and taken a big bite out of Source's second-quarter earnings. After buying Brite Voice Systems' electronic publishing division for $35.6 million in October 1997 (at the same time it bought similar operations from Tribune Media Services' Voice News Network for $9 million), Source was forced to take a $25.9 million noncash write-down in the second quarter. The reason: Source lost millions of dollars in Brite Voice customer contracts when those customers opted to go with another content and sales service provider. Source in April sued several ex-Brite Voice staffers, essentially claiming they took business that belonged to Source. Source in July sued at least one of the former customers for related reasons. Fallout from the problem-plagued acquisition of Brite Voice has been doubly painful for Source. Although the company showed significant year-to-year improvement in revenue and cash flow, the write-down amounts to nearly 73% of what Source paid for the Brite assets. Moreover, Source has acknowledged that lost Brite customers will continue to have a negative impact on the company's revenue and profits. Source wants to develop and launch its Interactive Channel on digital cable tiers. It also wants to sell its "virtual-modem" software, which permits certain Internet access without hardware, to the cable operators. Source has four corporate-level agreements for the Interactive Channel--with Cablevision Systems, Century Communications, Marcus Cable and Insight Communications. But three of those agreements are essentially dormant, with Insight alone likely to actively launch the Interactive Channel and virtual-modem service. Source announced the deal with Insight, whose president, Michael Willner, is on Source's board, at its July shareholder meeting. Insight plans to launch Source's Interactive Channel to its 91,000-subscriber Columbus, Ohio system by December. Source disclosed the loss of the former Brite Voice customers Aug. 14, when it reported second-quarter financial results. Source President John Reed acknowledges that Source knew about the lost business in the first quarter but couldn't gauge the financial impact until the second quarter. Most of those customers informed Source in December 1997 or January of this year that they were leaving. "By the second quarter we began to assess what, if any, permanent value had been affected by the former employees," says Reed. "We made an accounting assessment and elected to take a write-down." There were other key developments during the second quarter. On May 19, PanAmSat's Galaxy IV satellite, which provided service to about one-third of Source's IT Network customers, went dark. Source was able to serve manually those customers until service was restored from another satellite. Source reported the problem in its Aug. 14 earnings statement, noting that it was taking a 3-cent charge against second-quarter earnings because of costs associated with the outage. The timing of the disclosures has raised questions in some quarters. "I am surprised that the effects of the satellite outage and disruptions of the former Brite Voice customers on Source took so long to surface," says Curt Alexander of Media Group Research. Also on May 19 and the following day, a group of Source insiders sold millions of dollars in Source shares. Reed previously has said that the sales simply resulted from early investors in Source taking some profits from the rising stock price. As for Source stock (Nasdaq: SRCM), it has been on a wild ride since April, when rumors surfaced that Source was about to be acquired. Price and trading volume spiked in mid-April--ironically, about the time Galaxy IV malfunctioned--on speculation that Yahoo! was about to acquire Source. But the big action came in July as the rumor mill spit out Microsoft, Excite and At Home as potential buyers. Source stock hit an all-time high of $32.25 on July 14, prompting Nasdaq to halt trading and request comment from Source. Source officials waited a day and then said they could offer no explanation for the jump in prices. Shares have since fallen about 60% from the high and are trading in the $13 range, in the process cutting Source's market capitalization from nearly $400 million to about $165 million.