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

To: Zeev Hed who wrote (8471)	5/16/1999 2:26:00 PM
From: Michael Olds	Read Replies (5) \| Respond to of 17679

Zeev, If I may, I believe I see in your questioning of Carl, and in his answers, the heart of the situation as perceived by a number of “speculators” in AXC on this board and elsewhere. This position is that at this time, given what we know about AXC, the company cannot make it. That is not to say that the company will not make it. It is to say that some major new development is necessary for the unfolding picture to make sense. The likely possibilities that have been discussed at length are (in order of my perception of likelihood and value in terms of increased stock price): a strategic alliance with a deep pocket player (numerous ways this could happen include a big player taking a stake in AXC, or a joint venture); sale of equity (stock, convertible preferred, rights…?); or an IPO of one of the subs (if at all the one that looks like it is being groomed for such a thing is TVotW.) (The position here is that there is no time to sufficiently mature one of the subs for an IPO of the value necessary to solve the major funding problems that face AXC.) What makes the odds favor a bet on AXC is confidence that management recognizes the problem, knows what is needed to be done, is doing and is going to do what is needed, and that that will result in a critical mass in the very near future that will propel the stock price into a benevolent upward cycle that will enable the fulfillment of the vision. This position holds that if no “major” development is forthcoming within the immediate near future, the pace of development in the Internet (and web broadcasting in particular) will overrun the player who tries a straight-line roll-out. Net? This is not a stock for the conservative investor (one looking for the existing hidden value) at this time. This is a stock for those able to risk a portion of their wealth on a long shot with high odds. What you see in the play between those looking at AXC from this point of view and those attempting to establish value is a bull and bear tug of war within the bull camp. This explains the price action since December 1998. Every new announcement is seen as a sufficient step in the right direction by the value investors, while those looking for the major play see it as one step closer to the cliff without the major capital infusion necessary to keep the ball rolling. Finally, I think it is a mistake to think that the game being played out here is not an attempt to become what is being called here an "Internut" stock. A rational view of what is happening in the market today is telling all the major money people that bad money is chasing out good and that if one does not get some of that bad money into ones pocket, one is loosing wealth relative to the rest of the crowd every day. Another word for that is inflation. There isn't one big player out there today that isn't going for the buck.com.

To: Zeev Hed who wrote (8471)	5/16/1999 2:41:00 PM
From: Carl R.	Read Replies (1) \| Respond to of 17679

Zeev the difference between my stand on AXC and my stand on RMBS is quite simply that I believe that video on the web will explosively grow as faster bandwidth becomes available, while I believe that RMBS memory will never be widely used in PCs, or at best will be used for only a year or two before the market moves on to something else. SDRAM did provide a 3% improvement in overall system performance over EDO systems, but RDRAM does not outperform PC133 SDRAM at all when used for main system memory, according to reports I have heard. Perhaps these issues will be resolved and they will be able to achieve a 3% improvement over SDRAM in the end, but RDRAM will be selling at a 25-50% premium. Even if RDRAM becomes the standard, most memory standards remain the standard for only a year or two before the market moves on to something else. Maybe you are right and RDRAM will become the new standard and will be the standard forever, but I just don't believe it. Now back to AXC. As for the level of internet revenues, lets look at what is know about the various divisions. Let's start with TVoW. We know that TVoW currently has about 30 channels. A year or two ago they were offering channels for $125 a month (see the archived Washington Fireworks program). As recently as a month ago the price quoted in the fireside chat was $1000-1500 a month. As of last week they were quoting $2500-5000 a month. This implies to me that they have strong demand from underwriters. They also have indicated plans to be up to 100 channels by year end. I am fuzzy about ad revenue, but I suspect that between the ad revenue form advertising, e-commerce, and underwriting fees, TVoW currently nets about $5,000 per channel per month, and will net more like $8,000 per channel per month by year end. TVoW also gets revenue from other sources including production. Thus I assume that the revenue of TVoW is probably in the range of $200,000 per month right now, and will be more like $1,000,000 by year end. These figures do not take into account any revenue from Malta where TVoW is setting up a pilot project, as well as a production facility. Therefore by year end revenues could easily exceed $3 million per quarter which should be enough for an IPO if desired. I would also guess that TVoW will be profitable by then, but since we can't see the financials this is all speculative, but remember, they were apparently profitable in 1998 at a much lower price per channel. Next comes Reiter. All we really know is that they are growing fast, at least at 300% a year. Their revenues will appear on the AXC financials this quarter, after which time we will be in a better position to evaluate them. I presume that their revenue per quarter in probably in excess of $1 million, and will exceed $2 million by year end, but I really don't know. The in-house project currently has no revenue at all, but presumably will grow quickly. If it has revenue of $600,000 this year it is doing well, I presume, and almost all of it would be in Q4. However it should grow faster than the others once on stream due to things learned in the other divisions. As for AENTV, I have no understanding of their revenue stream at all. All that is know is that they were profitable in 1998, which implies that they have some revenue. <G> I assume a moderate revenue, and moderate growth rate (for an internet). Therefore I'll make some wild guesses as follows: Q1 Q2 Q3 Q4 Q100 TVow $.3 $ .6 $1.3 $2.8 $4.6 Reiter $1.0 $1.4 $2.0 $2.8 $3.9 In-house 0 0 .1 .5 1.3 AENTV $.5 $ .7 1.0 1.5 2.3 TOTAL $1.8 $2.7 $4.4 $7.6 $12.1 Thus to value AXC, using the "internut" valuation model of 250 times current quarter sales, these subsidiaries are worth $675 million. With AXC owning 51%, AXC's share would be $344.2 less the $7.2 million they will have to pay to to exercise their options, would be $337 million, or about $5.60 per share. If the royalty stream is worth $40 million, and Micronet is worth $25 million, and Ampex Data Systems is worth another $60 million, then the combined value would be $7.70 per share. Carl