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Technology Stocks : Enterprise Informatics -- Ignore unavailable to you. Want to Upgrade?

To: bob zagorin who wrote (2879)	11/18/1998 7:43:00 PM
From: jackhach	Read Replies (1) \| Respond to of 13797

On the conference call John Lowe indicated that we would probably see a slight (I assume under <10%) decrease in operating expenses. Assuming they managed to reduce operational costs by an additional 10% (annualized) and raised margins to 50% from 48% currently; ALTS would need to gross approximately $15.5 million to break even. That would be just under $4 million a quarter going forward. That figures to be a gap (loss) of about $700K per quarter. Fortunately they had a little over $2 million in cash on the books at Q3/98 end. This would provide them about three quarters to operate at current revenue levels (thru Q2, possibly into Q3/99.) I would also assume they can begin to shift some of the R&D expenses ($552k for Q3) over to that of M&S ($887 for Q3.) In an effort to place emphasis from EB development to EB promotion. So, by my very loose numbers they have to beg/borrow/steal (non-dilutive) about $4/$5 million (by Q1/99 end) to give them the room to operate comfortably -- and gain back the confidence of investors other then just me, Dr. P, and Bob Z. I personally like their chances very much!!! Not because they will be able to borrow any more money, but, because some larger company will see their need and likely exploit it for a cheap technology/market access buy. The cheapest, as I see it, that ALTS could possibly be offered up at is $17 milllion (or $1.75 a share.) This being 325% higher then today's closing price. The suitor would be only paying 1.25 times sales. Not much risk given the advanced state of EB's development and obvious promise. Pay no mind to ALTS client list. ALTS existing creditors would likely have to approve any management-led "friendly" deal whereas a hostile (not likely) would obviously bring a much higher price. Again, current ALTS creditors would be given little choice but to make/accept such a deal. -JH