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Microcap & Penny Stocks : REVERSE SPLITS ! Mad as Hell not Going to Take It -- Ignore unavailable to you. Want to Upgrade?

To: Bob Davis who wrote (210)	2/2/1999 9:41:00 AM
From: Joseph Hoane	Read Replies (1) \| Respond to of 217

Bob Davis Re: FIBR, on your letter napeague.com First, my disclosure, I am long on FIBR. Your details and explanation of the events surrounding the reverse split in FIBR are a little off, although I don't argue too much with your general statements. 1. The reverse split was announced about 7/1/98. 2. The reverse put the opening price just above $7, which was a few days before your arrow on the chart. 3. The reverse split was NOT performed to to prevent de-listing, but to enable NASDAQ National market listing, which was achieved in December, 1998. 4. The turn around occurred after a conference call at or about 9/24/98. The day after this call, the stock went from $2.50 to $4.00/ share. The reason will be explained below. The reverse split was almost "the kiss of death" because of two other factors. The company had issued $8 million in floorless convertible preferreds in May, 1998. The company had quarter over quarter declining revenues. Things LOOKED bad from a financial point of view and the sell off at one point brought the market cap. of Osicom down to about $16 million. However, if Osicom could survive this death spiral, the fundamentals kept improving. Osicom was/is oddly put together. It has four divisions, two of which sell old, legacy products. These old divisions have declining revenues. The two new divisions have new, award winning products. Go peruse the news on Yahoo. The problem is that the lead times for deployment of these products are over a year for each one. One because of slow acceptance and integration, the other because a circuit board must be designed around it for each customer. So, while these two new divisions were ramping up (Osicom needed the $8 million to deploy the Gigamux, one of the two products, in customer's labs for evaluation.), the two old divisions were declining, hence the bad looking financials. What turned the share price around was the announcement that one of the old divisions was up for sale. This division consists mostly of an ISO 9000 rated factory in Hong Kong. It's margins are only 20% and it was suffering from the Asain flu. However, it is worth $30-$60 million. Even in a fire sale, the CEO announced that Osicom could get at least what Osicom paid for it, $11 million. With $11 million in Osicom's pocket, they could redeem the convertible preferreds with no dilution to the stock. In the end they allowed about 12% dilution, not the 50% dilution people were afraid of. They continue to redeem the convertible at the rate of about $.75 million/month, out of current income. They still intend to sell the Hong Kong plant, but are waiting for a fair price. They had 8 bidders at the last conference call. In this case the threat of selling the Hong Kong plant stopped the death spiral. Osicom had substantial revenue for the two new products last quarter. The fiscal year just ended Jan 31, 1999. The CC should be in early March. They let everyone listen. In fact, the last two conference calls are still available via RealAudio at osicom.com What do I expect from this company? (Here is the SPAM.) I believe the fair (base buyout) price for Osicom is about $530 million. The current market cap. is under $150 million. The reason is comparable values in the industry. Nortel just bought a private company called Cambrian for $300 million. They bought Cambrian specifically to acquire a developing product which is the same or similar to Osicom's Gigamux product. The other new Osicom product is NET+ARM. This is roughly equivalent, thought much superior in some ways to what the company Echelon (NASDAQ: ELON) offers. Echelon has a market cap of $100-$300 million depending on what day you look at it. Finally, I value the Hong Kong plant at $30 million. Cash. The sales of the new products will, in my opinion, double quarter over quarter for a while. The other comp. to the Gigamux is Ciena's products. Ciena does not have a viable short haul product. That is what the Gigamux is, a short haul DWDM box. The reverse split allowed me to triple my equity position in this company. Joe Hoane