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Strategies & Market Trends : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (209)	3/28/1999 8:07:00 AM
From: Razorbak	Read Replies (1) \| Respond to of 477

MVIS - Comments John: Excellent points. I went back to my model and did some quick sensitivity runs to determine the direct effect of the equity component (MVE) on the MVIS Z-score. This is what I found... Z (assuming current stock price, $13.00) = 4.81 = Strong Z (if the stock price falls 15%, $11.05) = 2.96 = In Danger Z (if the stock price falls 25%, $ 9.75) = 1.72 = Near Death Z (if the stock price falls 40%, $ 5.20) = (0.14) = Near Death Do you or Josef happen to know offhand what the cash burn rate is for this company? <<It's a development stage company. And a story stock. As I've noted before, I think the Altman scheme is not suitable for analyzing development stage companies.>> I don't really agree here, John. Sometimes it takes a little time for the Altman model to ID a declining trend, but once the trend is in place, it's often fatal. IMHO the trend in a company's Z-score is the key indicator, not an individual snapshot in time. Take a look at the AIPN analysis (#reply-8483710). There's another former story stock and development stage company... no oil production on the upstream side, and a start-up asphalt refining operation on the downstream side, with a huge cash burn rate. Look at how the trend has deteriorated over the last 9 months alone. Sure the stock price decline has been a major component of that, but the fact is that four of the financial ratios (X1-X4) went south during that time period, and only one increased (X5). The question is: Can they recover? Altman's model would suggest that they probably cannot without great difficulty, given the magnitude of the trend. Perhaps we should look at the trend analysis on MVIS? Josef, would you like to have the honor of doing this? Razor

To: Q. who wrote (209)	3/28/1999 11:34:00 AM
From: Zeev Hed	Respond to of 477

John, what is interesting, however, is that MVIS managed to raise convertible debt under what I would call quite favorable terms. Furthermore, I do not see any indications in the short position that this debenture was hedged (and at $16/share there was ample opportunity to do that by the debt holders). These people must think that the prospects of MVIS getting their show on the road are pretty good. Zeev

To: Q. who wrote (209)	3/28/1999 1:20:00 PM
From: icecreambug	Respond to of 477

The short position went up substantially from 244K to 347K. The stock seems to be staying there, not going down, though. Have you been shorting MVIS so far? If so, you may have to recruit more of your short friends. But, the question is why in the world would anybody like this company to go bankruptsy? If this company pulls it off by generating value, it will be good for the whole world. Many people will get the benefit. Even some group of blind people will may be able to see using this technology. If it goes bankruptsy, only a handful of shorters will make just fistful of dollars. IMHO.