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Technology Stocks : Voice recognition - who will dominate? -- Ignore unavailable to you. Want to Upgrade?

To: Victor_F who wrote (78)	9/24/1998 12:32:00 PM
From: Dr. Bob	Respond to of 81

Victor, Just a few words of caution, even at this level: 1. The vaunted fonix neural network technology is STILL not available on any product on the market, and has only one very small licensing agreement in place, with Siemens. 2. The two companies whose products fonix is selling, AcuVoice and Articulate, were both struggling to make it in the marketplace on their own. It remains to be seen whether fonix, with no prior experience at acquisitions (except the terribly bungled KLSE experience) can turn these money-losers into profitable subsidiaries. 3. Check out the competition (especially LHSPF) and the number of licensing agreements they are developing on an almost weekly basis. Even though fonix has made a little progress with the acquisitions providing them products they seem not to have been able to develop internally, the competition is on a roll. FONX is further behind now than they were two years ago, or even 6 months ago. You might consider waiting until after the 3rd quarter earnings announcement, when it will be clear 1) whether substantial revenues are being generated by AcuVoice and Articulate, and 2) whether Siemens is serious about a major relationship with fonix. The only reason to buy now is to maybe get lucky with the buyout talk that's going on - but I'm having trouble figuring out who would pay well over $100 million for a player who is no better than third in any of the markets they compete in. I think this is more likely a ploy to allow a few more people to get out of the stock before it tanks entirely. Bob

To: Victor_F who wrote (78)	9/25/1998 9:17:00 PM
From: Dr. Bob	Respond to of 81

Victor, A couple more thoughts on FONX: One has to be concerned about the length of time that has elapsed since the first Siemens Statement of Work, and what it might mean. Consider this possibility - perhaps Siemens signed the first agreement in order to "get a look under the hood" of FONX's technology. A million bucks is confetti to them, and it would give them a chance to deconstruct the hardware/software enough to figure out whether it was worth it to them to license - or perhaps, to copy. If Intel, with all its patents and muscle, couldn't prevent clones from being developed, what are FONX's chances? So, the length of time that has elapsed COULD mean a couple things: 1. Siemens has had a good look at FONX's technology, isn't particularly impressed, and there never will be another SOW. It sure has been awfully quiet out there! Or, 2. Siemens thinks FONX has something pretty good, and is figuring out a workaround so that they can move on with it, but without FONX - or maybe just a cross-licensing agreement that keeps the lawyers off their backs, but never makes FONIX a profit. If they thought it was great and weren't doing a workaround, wouldn't they be in a hurry to lock up the rights? Lest you think FONX's patent will protect them, I'm not so sure. It surely isn't broad enough to protect neural network use in general, as other companies already have neural networks doing voice recognition on the market. So just how will it protect? I haven't found a single FONX bull who can explain what the patent covers, let alone whether it would be easy or not to work around. And that's another place the delays have been ominously long - FONX management promised additional patents would be forthcoming, but they have been curiously silent about that for some time, and you don't even hear the FONX bulls talking about it, or rumors circulating to the effect that more are on the way soon. IMO, the absence of more SOW's from Siemens, the absence of ANY other company to license FONX's core technologies, and the absence of any further patents tells me that this company is dying. Buying a couple of also dying companies has given them breathing room to tout products and revenues, but the likelihood that they will turn this into a profitable enterprise is very questionable. IMO, a buyout is the only hope, and I STILL can't figure out who would want to pay enough to make it worth buying the stock at this level on the chance that might happen. Just things to think about! Bob