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

To: Zeev Hed who wrote (8448)	5/15/1999 6:40:00 AM
From: Thomas Kirwin	Respond to of 17679

AXC Valuation Attempts Zeev, Here ya go..... techstocks.com

To: Zeev Hed who wrote (8448)	5/15/1999 7:05:00 AM
From: Thomas Kirwin	Respond to of 17679

More AXC Valuation Attempts Zeev, Most AXC valuation attempts have centered on a comparison between TV onthe WEB and Broadcast.com's outrageous acquisition price of $5.7 BILLION by Yahoo! The addition of other internet concerns have only increased the potential intrinsic value of AXC. Here are some of the discussions regarding value. techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com techstocks.com Message 9262571 Best O'Luck! Tom

To: Zeev Hed who wrote (8448)	5/15/1999 5:18:00 PM
From: Carl R.	Respond to of 17679

Zeev, I will give you some ideas concerning how to value AXC later as I do not have time right now. You are correct that the bulk of the value resides in the value of the subsidiaries. As a comparison look at the valuation given to ADFC, of which I own 100 IPO shares. They had sales in the first quarter of $3.2 million and a loss of $5.0 million. They have both increasing sales, and increasing losses, albeit with decreasing loss margins. The market is currently valuing them at about $800 million, or 250x quarterly sales. Assuming that sales for TVoW are currently running at $1 million per quarter, and will be running at $3m per quarter by year end, then they are worth about $250 million, which accounts for about $2/share of Ampex's value. If you take into account that TVoW has much narrower loss margins, then the value of TVoW is arguably higher. If you use BCST as a basis for comparison, the value of TVoW is also much higher. As for your comparisons to PMAT, I see a few similarities and a lot of differences. The similarity that they have big eyes and are trying to make a huge growth all at once is obvious. But I see some definite differences. 1. PMAT was expanding in an area that was seeing dramatic sales declines. AXC is expanding in an area that is seeing some dramatic sales increases. 2. PMAT used up all their cash in making their acquisition. AXC has been very tight fisted with their cash. 3. PMAT was run by dreamers and was weak in the area of financial planning. AXC is run by financial experts. PMAT's attempts at additional financing were poorly executed, while AXC has done a remarkable job of building up a pool of investable cash even as the sales declined. 4. PMAT was taking on much larger and entrenched competitors, LRCX, NVLS, and AMAT, as well as foreign competitors. The market AXC is attacking is new and very fractured, and certainly no one is "entrenched". You argue that BCST has a lot of viewers for Victoria's secret, but many came to TVoW to see John Glen. 5. PMAT apparently had some technical problems that resulted in unsatisfied customers and ballooning AR and inventory placed as "demonstration units". AXC is not using unproven technology. 6. PMAT integrated Electrotech into the American operations meaning that the problems of one became the problems of the other. AXC is a holding company, so if one division fails but others thrive, the problems of one do not affect the others. 7. The holding company structure has limited to a great extent the amount that AXC could lose in any one venture. They have currently invested a total of $5million combined in TVoW and AENTV, and if they exercise their options to buy up to 51%, they will have to invest an additional $7.7 million. This is quite cheap when you consider that for $12.7 million they may have bought $250 million in value. 8. The cash flow is not precarious. They have $51.5 million in cash and short term investments left as of the end of the quarter. They can probably use $30 million or so and still have adequate working capital. If they do use the $7.7 million to exercise the options on TVoW and AENTV, that will leave them with about $21 million. In the first quarter they used $.9 million for internal internet video operations, $1.6 million for Micronet, and $3.6 million for Ampex Data Systems. Even assuming that they are unable to remedy these negative cash flow situations, they have enough cash to last the remainder of the year. I do believe that they will improve cash flow, so the cash may well last until the middle of next year. Before that time however I expect them to do either a secondary offering of AXC stock, another convertible issue, or an IPO of one of the subsidiaries. On the other hand, as in the case of PMAT there are some significant risks. In particular they have a significant interest requirement, and if they use their cash up for operations these interest obligations could become increasingly hard to meet. Still I don't think this will end up the same way as PMAT as I think the risks they are taking are reasonable and likely to succeed. They are proceeding according to a well developed plan, and Bramson has a reputation for accomplishing what he promises. Of course you are right that if video on the web fails, or the internet stops growing, AXC will be in trouble, but I don't think that is likely. I am in this stock because I am impressed with the management's vision and financial ability, and I believe they will be successful in pursuing the plan they have set out to accomplish. Last year they established a very thorough plan to take advantage of the internet, and they are making steady, exciting progress towards that goal. Carl