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Technology Stocks : ACTM $100 Million Cable Modem Contract with MOT -- Ignore unavailable to you. Want to Upgrade?

To: rich evans who wrote (1002)	5/19/1999 10:59:00 AM
From: jeffbas	Respond to of 1250

Rich, I agree with you. However, as I have previously posted, we face arbitrage influences for the next couple of months or so. ACTM is so thin that any additional selling is tough to absorb. Furthermore, neither company has delivered much in the recent past, the combined balance sheet would not be good unless that Cortelco IPO gets done, DIMD may be a question mark as CMCI 26% customer. My view is that there is a lot on the come and sometime between now and August we will be able to buy CMCI under $6. If the new company executes well we might be looking at a triple in 2-3 years -- the valuation level doubles and sales rise 50%. If they execute less well we still should see 50-100% -- a smaller increase in sales and valuation level. With that outlook it is tough to be patient and not buy CMCI here, but I have been through small cap arbitrage before and I will wait.

To: rich evans who wrote (1002)	5/19/1999 11:01:00 AM
From: joemjo	Read Replies (1) \| Respond to of 1250

"market valuation" two thoughts. R2 for earnings stability is horrible, CMCI is all over the map on linearity. ACTM is starting to build confidence. Shareholder of app. 38%. Mr. Pino controls the company. At least he is no longer greater than 50% but I still think a discount is going to be maintained as institutional shareholders lack leverage even if they gang up.

To: rich evans who wrote (1002)	5/19/1999 11:53:00 AM
From: kolo55	Read Replies (1) \| Respond to of 1250

Hate to rain on the parade... but where is money coming from? In order to restructure their operations (like combine MIS functions like inventory and materials tracking), it will take some money. My guess is probably about $5-10M. Then for this company to really grow, it will take even more money. In order to grow revenues 15-20% a year, they will need at least $25M in positive cash flow annually to fund Capex. Finally, both companies haven't kept pace on investing on newer equipment, falling behind competitors, so they probably need another $25M or so to fund Capex to replace and upgrade aging equipment. These would be my first rough pass numbers. Altogether they will need to $55-60M or so over the next year. There isn't enough cash on either balance sheet to fund these needs to stay competitive and grow at the rate necessary to give this company a good multiple of either earnings or revenues. The best thing ACT could do now, is do a secondary offering of stock, strengthen the balance sheet with $100M dollars, and then get in the hunt for the big game afoot today. I won't hold my breath waiting for a secondary though, this management moves slower than molasses when reacting to market trends and customer needs. And their "systems" are poor... we still don't know what happened to the $13M they "mis-placed" last year. Of course, a lot of this is reflected in the stock price. And if the big guys are as busy as I have heard, then some business should fall down to the second tier players like ACT. But I think that buyer may get a much better entry price into this stock sometime in the next several quarters. Paul