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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: K.Martin who wrote (5834)	2/26/1999 9:43:00 AM
From: Fundamentls	Read Replies (1) \| Respond to of 17679

I have been lurking here for a while doing my DD and waiting for a potential buy-in point. While I believe that AEN-TVWEB have the right long-term concept, I think the comparison to the BCST IPO might not be realistic. BCST is an eyeball company, not a content company. Its IPO was based on great timing, terrific PR, and a dazzling web site. Absolutely none of which have any guaranteed long-term value. A better comparison for AEN-TVWEB would be the better-established VDAT. The similarities in vision articulated by TVWEB and that actually being executed for the last five years by VDAT are remarkable. SI has a decent thread on VDAT but the Yahoo one tends to be much better. This in and of itself is a curious phenomenon, since most tech/internet stocks have livelier and more informed discussion on SI. VDAT has only recently begun to be recognized as an Internet play. It's been that all along, it's just that the value of content has only recently started to overtake the value of eyeballs. VDAT's IPO occurred in mid-1997. Bad timing, but you do what you have to when you are running out of cash. They also focus on narrow vertical markets where they can own the content. But at the time no one saw them as a net play because streaming video was still "out there in the future." The stock went from $6 down almost to $1 by late last summer. Then only in the last few months, after the BCST IPO had settled down and investors had had some time to think about how this will all play out, did they start looking around for the long-term content players. Between early December and late January, VDAT rose from the mid-$2 range to $17, mostly by attracting new investors enamored of its business model. The visibility and improved capital access has enabled it to rapidly accelerate its pace of growth, acquisition, and strategic alliances. It's not profitable yet but they are projecting breakeven by year-end, which is a lot better than BCST is expecting. The stock price has retreated on profit-taking and the bear market, but is still holding in the $12-13 range, and there are numerous activities under way that many expect will soon be announced, with the potential to move the price much higher. There are lessons here for those considering an IPO for this business. The first is that timing and visibility, not concept, are what drives the short-term price. Long-term I am more comfortable in my position in VDAT (which is very large) than I would be in BCST. I might feel the same way about AEN-TVWEB; I haven't done enough DD yet to know. If I had had BCST pre-IPO I would have sold it as soon as I could because I think its days may be numbered. Not short-term, but in 2-3 years when its exclusive content agreements start to expire, its portal withers, and people begin to realize there's no "there" there. BCST is perhaps better compared in my mind to Westinghouse Broadcasting than to NBC. Remember Westinghouse? They used to be broadcasters and had more "eyeballs" than just about anybody. They even owned NBC at one time, if memory isn't failing me. The problem was they were offering just a commodity, and didn't focus on content, most of which was obtained on loan. In fact they sold off most of the content production capability they had. They're essentially out of that business today - I think there may be a few vestiges left, but not much compared to its heyday. The better comparisons for companies like VDAT and potentially AEN-TVWEB are, in my mind, companies like Disney and Time Warner. They may own broadcasters but they are really content providers. VDAT and AEN-TVWEB won't be able to compete with them on feature productions, at least right now, but a "vertical market" focus allows companies like VDAT and AEN-TVWEB to develop a viable business model without attacking the proverbial 20-ton gorillas. These are markets that did not previously exist, that are enabled by streaming video, and that fit the evolving Internet advertising-driven business model. The other issue with an IPO is that if AXC drops its stake to 40% it can no longer consolidate revenues and earnings from its stake. This would help the stock price of the new company but could be devastating for AXC shares. The new company could IPO at a great price (if it's lucky and smart), but AXC would be stuck with only the remaining declining businesses, and paper profits on its investment. Those who buy into the AEN-TVWEB vision would be well served to check out VDAT, as I will be checking out AEN-TVWEB. In fact there might well be reasons for the two companies to join forces, since AXC has some technology that VDAT currently outsources, and VDAT has deeper industry ties than are apparent to me in AEN-TVWEB (particularly when you look at VDAT's majority-owned subsidiary, EDnet). This is an interesting opportunity. Good luck to all! dr