Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Source Media SRCM -- Ignore unavailable to you. Want to Upgrade?

To: MW who wrote (2273)	4/2/1999 5:27:00 PM
From: Kevin Podsiadlik	Read Replies (1) \| Respond to of 3015

That's nice, hon. Let me know when you want to try to actually contradict what I said. Meanwhile, for a little light reading, a look into "Risk Factors" section of the latest SRCM 10-K, the things the company would rather not talk about but have to to satisfy the auditors: Substantial leverage; ability to service debt. 5 bullet points spelling out the risks of having basically the whole company mortgaged. Need for additional financing. They don't have the funds to get Interactive TV going, and they have no idea where they might get the money. Insufficient collateral. You can easily verify this from the balance sheet: the entire assets of SRCM are not enough to pay off their debt. Change of control. A doomsday scenario wherein they would have to buy back their notes and preferred stock. They won't have the money to do it. A hypothetical paragraph... or is it? Historical and projected losses. SRCM has never made a profit and doesn't know when they might start. Risks related to proposed transaction with Prevue. Prevue being now known as TV Guide Interactive. This is the big part of the whole section. They have to negotiate "in good faith" and exclusively with TV Guide. If SRCM unable to "cosummate the transaction" (whatever that means), TV Guide, TCI, and News Corp. get to use SRCM's stuff anyway and SRCM gets peanuts for it. And of course, even if the transaction is "consummated" and Newco comes into being, there's all the usual risks, plus the fact that TV Guide would have the right to buy up to 40% of SRCM at that magic $14.25 share price. Which puts SRCM hazardously close to that "change of control" scenario above. Access to channels on cable systems and uncertainty of subscriber acceptance. Remember all those "successful" trials the Interactive Channel had? Or was it "successful completions", as in, the cable companies were successful in ending the trials? Availability of programming. SRCM makes it sound as if they don't actually have anything to air on the Interactive Channel. Reliance upon proprietary technology. "If competitors develop alternative technologies... our prospects and value may be diminished." What do they mean, "if"? Further technical development is needed to improve the economics of deploying Interactive TV to multiple cable systems. In other words, they are admitting that their product, as it stands, cannot be sold at a profit. Delayed digital roll-out. This one technically isn't SRCM's fault. Cable companies haven't been introducing digital cable as quickly as SRCM would have liked, thus putting limits on SRCM's market. Integration of technology with digital set-top boxes. An old favorite among the debate topics here. I would point out that the GIC-2000, the only box with this SRCM's software has been made compatible, is now being marketed as the "lower-tier" setup by GIC. Competition. The usual stuff. The only reason SRCM has any revenues at all is because the RBOCs (Baby Bells) have decided it is less trouble to outsource those free local information recordings they advertise in their phone books. Of course, these don't help SRCM much overall, but at least they get to claim revenue this way. Evolving nature of business. Yes, SRCM must keep upgrading their technology to stay competitive. Too bad they've actually been reducing R&D expenses. Shareholder rights plan. The usual anti-takeover measures. Stock volatility. We saw that yesterday. Common share price. Gee, options for 8.5 million shares exerciseable at $14.25 each, and you couldn't figure out why the price couldn't say in the 20s? Year 2000. SRCM isn't Y2K ready yet. They don't know when they will be. Hello, Zitel? Reliance on key personnel. There literally exist people in SRCM without whom the whole company would come crashing down. Government regulation. While they don't specifically mention the SEC... Your serve, MW.