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

To: Greg h2o who wrote (2894)	11/25/1998 12:38:00 PM
From: jackhach	Read Replies (1) \| Respond to of 13797

Greg, I recall the cc, your question, and Ericson's response. You are correct. However, I believe there was still (at that time) a lack of humility in Ericson's response. The fact is, they have little or no choice but to begin to seek a buyer at this point. Just a few months ago, I suspect, ALTS was confident that they would somehow secure the cash needed to carry them through. I now believe they have come down from that position. Money, like statitics, never lie. Why would you lend money to ALTS? What ultimate leverage do you have? Lenders are not in the business of operating technology companies when they run out of cash. They can only pray that you seek/find a buyer to acquire the debt. ALTS is still selling at 30 to 40% of current sales. A buyer could purchase ALTS for $16/$17 million ($1.50 to $1.75 a share) and would, in effect, be buying the unreleased ALTS EB product for about $5 or $6 million. However, the new company would have to throw $3 to $4 million at (EB specific) promotion, delivery, and support over the first 15 to 18 months on EB. The net total purchase of ALTS and its clients would work out to about $8 to $10 million over two years. Add 10% for use of dollars (over 2 yrs), and your looking at a about $9 to $12 million outlay. The questions then become: Will the suitor/buyer be able to sell $9 to $12 million worth of EB in 24 to 30 months to justify the buy? What is the average dollar size of these large e-wide deals when made? How many existing customers does ALTS have to sell to? How many new potential clients exist in the marketplace? Would the suitor/buyer be able to sell to their own (pre-ALTS)clients? Could they sell their own (non ALTS) products to this new list of acquired accounts? How many new markets/industries would become available to the suitor/buyer through an ALTS acquisition? How much residual income would flow from any of these deals in later years? -JH