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

To: nokomis who wrote (585)	3/12/1999 9:24:00 PM
From: Mark L.	Read Replies (5) \| Respond to of 703

Anthony@Pacific: I am trying to get a feel for this company - - these links (picked up from Yahoo) should get considerable attention for those not familiar with range/importance of tutorials (especially from corporations using them to train employees). Am I missing something here? Why do you not place any weight in these While I'm not Anthony@Pacific, I feel your thoughtful post deserves a response from someone with a short position. I'll take a whack at it. First, I do think the links have validity. I think it's wonderful that 7th Level is trying so hard to get their product out there. But let's try to look at this company in the abstract. Suppose I, not 7th Level, came to you looking for an investment. I explained to you that my company did not have any patents, nor yet even a brand name that meant anything. In fact, the product I was producing was something of a commodity: anyone could make it, though I felt that I could do it better than other people. When you tried the product, you recognized that it was professionally done, but it didn't seem particularly better than any other product. I had not made any money up to now on the product. In fact, I barely had any experience selling it at all. I had made some alliances with well-known, much larger companies. What that meant was that I was paying those companies a substantial sum of money; they, in turn, didn't particularly care whether the product sold well or poorly. All they cared about was that the product was not an embarrassment and I would not be sullying their good name. They had checked into it and decided that they were fine. These iffy comments made you look into the market for the product. I explained to you that, despite an apparently vast market with a compelling need, no one had made much money in this business in the past--but I felt that I could do better than they. I felt that there was a similar product (in 7th Level's case, training books) which had been quite profitable, so I had confidence that I could buck the trend. Plus, I was going to be spending a lot of money in advertising. A great deal of money. In fact, so much money that it was starting to make you nervous. Then you looked into me. You discovered that my accountants felt obliged to tell you that there was significant doubt as to whether I could escape bankruptcy. Finally, I had no experience in this new field. How much money would you give me? Would you give me any money at all? And, if you would give me anything, how much would you value the company I was putting together? Would you value it at, say, $4,000,000 an employee? I think you get my point. The word "Internet" does funny things to people. Sure, everyone knows that the Internet is the future and that corporations have vast training needs. These two facts, however, do not change fundamental principles of economics and valuation, as would be evident if I came to you with the same offer as 7th Level. Of course, if you are just considering 7th Level as a momentum play, based on people's infatuation with the Internet, then none of the above applies. There may very well be greater fools after the current purchasers. But, sooner or later, either the stock price is going to have to fall, or 7th Level will have to go where no one has gone before--making real money in this business.