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Microcap & Penny Stocks : DGIV-A-HOLICS...FAMILY CHIT CHAT ONLY!! -- Ignore unavailable to you. Want to Upgrade?

To: Jane4IceCream who wrote (40257)	3/11/1999 1:24:00 PM
From: The Street	Read Replies (1) \| Respond to of 50264

I agree Jane-- that is totally laughable....

To: Jane4IceCream who wrote (40257)	3/11/1999 5:09:00 PM
From: Lazarus Long	Read Replies (5) \| Respond to of 50264

Hello Jane, Chip & Howard, Let me state up front that I am not sure that I agree with Mr. Chin's reasoning... nor would I actually say that I wouldn't do the same in his shoes. I have opinions, but I don't think the situation is as black and white as it might first appear. Given that, let me play Devil's Advocate with you and try to defend the unpopular stance that Mr. Chin has taken. The discussion is based on two assumptions: that the company is doing its best to land those elusive contracts and that it is not in the strongest of financial conditions. The competitive advantage gained by not disclosing the company's current situation is two-fold. 1) Mr. Chin is trying to negotiate deals in certain overseas countries. Most likely DGIV is not the only company that trying to do so. Now, DGIV is not trying to go head to head with the IDT's, the Lucent's or Qwest's... they are competing with much smaller company's for much smaller pieces of the pie. There is an advantage to the customer to divvy up the pie in smaller pieces so as to induce competition over the long term between the suitors. Now I am sure that Mr. Chin is selling the company as being quick, nimble and responsive. He is probably willing to be much more flexible in negotiating the structure of the deals than larger company's. But, would you as a first level bureaucrat take the risk of even starting negotiations with a company you knew to be as financially weak as we suspect of DGIV? Would you want to be the first to fall in line with a company that has no significant IP revenues? If the facts are out there, it is much more difficult to dance the dance. One might be able to get by on the strength of waiving a bunch of MOU's in their face. Furthermore, if the country gets to final negotiations, they may take a much more aggressive stance if they know the company is "hungry" (to the point of starving) for that contract. 2) If I was competing with Digitcom for a contract and I knew the financial condition of Digitcom, I would have a pretty good idea of the limits that Digitcom might go in order to secure the contract. If one could deduce that DGIV needs to make (let's say) 15% on their investment and is in a financial position to take advantage of that knowledge, the bid could be undercut in hopes of making it up come renegotiation time... and with the knowledge that DGIV may not be there to cause problems. Operating successfully in business is often likened to waging war. That is why many MBA programs make Von Klaus' On War and Sun Tzu's Art of War required reading. (BTW, I may not have those titles exactly right.) Information is power. Digitcom does not want to transmit to its enemies (read either as competitor or customer during negotiations) its vulnerabilities... pure and simple. They will; however, feel free to provide information on any perceived strengths. If you would like a fascinating contemporary example of this sparring, take a close look at the battle being waged between Intel (INTC) and Advanced Micro Devices (AMD). I am positive that AMD wishes that 2 years ago they could have gotten away with being a non-reporting company and clamped the lid on information leaving the company. Instead, a great deal of information about AMD is available to INTC and it makes their defense of long term market share one heckuva lot easier. BTW... another lesson from INTC vs. AMD... INTC really didn't start paying much attention to AMD until AMD started actually taking significant money out of INTC's pockets... then they got aggressive. I would think the same would be true of DGIV versus some of the major players - if DGIV ever gets to that point. Now as to taking care of the share holder... this is an interesting thing... books have been devoted to the subject. However, the first thing to take note of in this situation is that the Chin family controls the majority of the shares. That is a really important aspect to the discussion because it means they can effectively do what they want and because it probably means they have a much longer horizon for holding shares than the average shareholder. Current philosophy is that the shareholder is boss. Theyare the owners of the company and management should manage the company to maximize shareholder value (within limits placed by government and localities). The question that management needs to answer is, should they manage for short term results or should they manage for long term results. More to the point, in Digitcom's case of very sparse resources, should the management be focusing attention on maximizing shareholder value now (i.e. quickly working toward reporting status and putting out PR's) or should they emphasize "building" the business. I am not suggesting that it must be one or the other, but I am suggesting that one may have to be emphasized over the other. Coming at it from an even different angle... what if the majority (long term) shareholder is convinced that becoming a reporting company will actually detract from or delay "building" the business? The last consideration I will throw out there is the following... when Digitcom was in the middle of its freefall from $8, Mr. Chin issued PR's and newsletters in an attempt to slow the descent. It would slow and often created a short term rise in price, but then it would start falling again. Even now, we see an announcement and the price rises in anticipation, drops quickly soon after the announcement is made and slowly continues to drop until we see anticipation of the next announcement. If propping the price of the stock is really a goal, it has to be a discouraging situation. In that kind of environment, why spend a lot of time and effort to keep the price propped up? - especially if you know that becoming a reporting company (which you don't want to do) is what is really the answer to becoming fairly valued. The only answer I can think of is if the company needed to print more shares to fund ongoing operations and / or the acquisition of assets. In that case, it would be in the company's interest to try and maximize share price on the short term. In a situation like I have described above, one would expect no filing until required to stay off the pink sheets. After that is done, then it would be time to make the decision to try and make the push required to get Naz listed - if the business so warranted. Hope the above wasn't too much rambling. Again, I want to emphasize that this is not what I necessarily believe, but it IS a VALID way for management to apprise and react in the current situation. Lazarus