This is rather lengthy, but I found it very interesting (granted, I wrote it). While it's impossible to accurately predict the future, it is very easy to have 20/20 hindsight. I have identified what I consider to be many discrepancies in press releases, and have labored to put them in front of us to discuss.
Before any of the cheerleaders claim I'm trying to manipulate the price, or that I'm one of the snake-in-the-grass, Canadian shorters, I'll let it be known that 80% of my non-401K monies are in this stock. I also sold Intel two splits ago, and @Home at $25, when the marines were about to land, in order to buy over half of my current position. I still own every one of those shares, having passed up a 300% and 400% return to get nothing.
Here goes…
"DCI Expects Record Breaking Quarterly Sales
STRATFORD, Conn., Sept. 23 /PRNewswire/ -- DCI Telecommunications (OTC Bulletin Board: DCTC)
On September 14, Donnie Gross, Chief Executive Officer for Edge Communications (Edge), a DCI subsidiary, announced the signing of two agreements with Latin Debit Technologies, Inc. (LDTI) of Miami, Florida, whereby Edge will provide $48 million of prepaid phone cards and services to LDTI over a twelve month period following a four month ramp-up."
Don't remember seeing anything about these contracts recently, although if we can trust the release, we should be at a $12 million per quarter rate right now.
"Record Breaking Sales Highlight DCI Second Quarter Improvements
STRATFORD, Conn., Oct. 29 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC),
Worldwide consolidated revenues totaled $10.4 million, a 197% increase over revenues of $3.5 million in the same period in the prior year. previously forecast which exceeded budgeted expectations. With the three previously reported contracts, the Company should turn the corner to profitability in the quarter ending December 31, 1998." He also added, "The Company has achieved its stated financial goals. In light of these events, the Company intends to exercise its buyback rights to its recently issued series F convertible preferred by the end of January 1999."
I guess the key points here are that DCI had $10.4 million in revs, should be profitable by the end of the 3rd quarter, and will buyback the Series F by the end of January. Hmm, don't think that ever happened, did it?
"DCI Acquires Nasdaq Company
STRATFORD, Conn., Nov. 6 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC)
Daniel J. Murphy, vice president of planning for DCI, stated, "It has been DCI's goal for the past two years to achieve the greater liquidity that comes from becoming a fully listed company on a major exchange. After reviewing dozens of such opportunities, this merger is clearly in the best interests of DCI and its shareholders. This sets the table for future events." The joint venture, which was completed the last day in August, did not start its "ramp up" for two major contracts totaling $340 million until late-October, 1998. DCI expects to be profitable for the quarter ending December 31, 1998."
Dozens of opportunities, and the best we could come up with is a shell of a company, ITEL? Delayed "ramp-ups" aren't good, but can be expected. I could live with a 6 month 'ramp-up", since it will get DCTC to nearly a $90 million quarterly run rate by May 1 (DCTC gets 51%, I think). Profitable for the quarter.
"DCI Elevates Status Through Alliance with IXC Communications
STRATFORD, Conn., Dec. 7 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC)
Since the London switch will be linked directly to the U.S., DCI's Canadian subsidiaries will also be able to take advantage of the direct line connections to countries throughout the world and dramatically reduce per minute costs. It is anticipated that the switching equipment and dedicated lines will be in place by March 1, 1999."
Switching equipment in place by March 1? Am I missing something, or are these the switches we are still waiting on?
"DCI Quarterly Sales Expected to be Record-Breaking
STRATFORD, Conn., Jan. 6 /PRNewswire/ -- DCI Telecommunications (OTC Bulletin Board: DCTC) DCI said third quarter sales should surpass second quarter sales by 10% to 15% and expects to exceed its earlier annual forecasts which called for sales between $40 to $50 million in the current fiscal year, without taking into account the recently completed transaction with IXC Communications, Inc. A number of additional switching sites are planned for installation during the present quarter and next fiscal year, which will enhance our global services and profitability."
Well, the quarter is over, the Edge debacle is known, but DCTC still is forecasting a 10% to 15% increase in revs. Actual quarterlies come in at $11.1 million versus $10.4 million, only a 6.7% increase. I guess it's not surprising that it was not a profitable quarter. At least DCTC will "exceed earlier forecast for sales between $40 to $50 million". This remains to be seen, if we ever see the annuals.
"DCI to Expand Network Capacity
STRATFORD, Conn., Feb. 2 /PRNewswire/ -- DCI Telecommunications (OTC Bulletin Board: DCTC), a provider of international telecommunications, announced today that it expects to finalize on a financing option this week enabling the Company to increase the capacity of its European network and establish its first company-owned gateway in the United States, by deploying three additional switches. Management has been evaluating various financing proposals, and is in the process of completing the most attractive option. The switches will be installed within 30 days of receipt of the funds. DCI expects to exceed its earlier forecast which called for consolidated sales between $40 to $50 million in the current fiscal year. DCI recently announced a planned merger with Wavetech International (Nasdaq: ITELD) which is expected to take place in late February or early March, 1999."
Whew, what an announcement. Finalized financing within a week (it took over 2 months), all three switches installed within 30 days of financing (now it's hoped for one by June?), a restatement of the annual revs forecast, and a completed ITEL merger by early March (no comment needed).
"DCI Achieves CLEC Status in Spain
STRATFORD, Conn., Feb. 24 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC)
Joseph J. Murphy, DCI's president and CEO, also indicated that negotiations for additional financing is underway to acquire additional switches, retire the outstanding convertible preferred issue, as well as provide operating capital to assist this phase of the Company's growth plan."
Switches over and above the 3 mentioned in the preceding release? Where does all the money come from??? Even enough left over to retire those pesky Series F shares.
"DCI Completes Financing
STRATFORD, Conn., April 5 /PRNewswire/ -- DCI (OTC Bulletin Board: DCTC) announced today it agreed to terms to finance additional switches in Europe and the United States. The switches will be phased in over a 30 to 90 day period. Current plans call for these large capacity "state-of-the-art" switches to be installed in London, New York and Madrid."
Financing done!!! I guess a 30 to 90 day phase-in is better than nothing, although the 30 day completion previously released would have been better. All switches should be in place by July 5.
"DCI Announces Agreement With Cable & Wireless
STRATFORD, Conn., April 13 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC)
With the first traunche of switches now being deployed, it is expected that DCI's London switch will be up and operating by early June 1999. It was also announced that DCI is completing the documentation for a $4 million debt financing, of which certain of the proceeds will be used to retire its Series F convertible preferred stock. The documentation is scheduled to be completed by the end of April."
Hmm, what happened to all three by July. Delays, delays. At least shareholders now know that the Series F shares will never come to market.
"DCI to Provide Data Transmission and Internet Service in Spain
STRATFORD, Conn., May 3 /PRNewswire/ -- DCI Telecommunications, Inc. (OTC Bulletin Board: DCTC)
During the period from January through March 1999, DCI Europe increased its long distance revenues from an annualized rate of $6 million to $15 million. Once the new Harris switches are installed in London and Madrid, the company's European long distance business is expected to increase to previously forecasted levels of approximately $60 to $70 million annually. The London switch is expected to be operational during early June 1999. The Madrid switch is scheduled for installation later this year.:
What the heck happened to DCI Europe and the $340 million worth of contracts that started ramping up in October of 1998??? An annualized rate of $15 million isn't even a 5% ramp-up. Madrid switch later this year, and no mention of the third switch??? What about the 30 day, I mean 30-90 day, I mean sometime this year installation??? Will the London switch be operational, or will the trading halt somehow impact the operational side of the business too?.
And why should I care about the "dribble rule" of the Series F shares coming to marker, when the company has promised to purchase them before they ever hit the market? Now the story is that the trading halt impacted the buyback that should have been completed by the end of January, and then by the end of April. Even if they do come to market, they'll pale in comparison to the potential 9,000,000 that DCTC will have to issue to IIXC. Boy, I sure hope there is some kind of cap on that number, or I might get sick to my stomach thinking about the dilution.
We can look on the bright side though, we should begin trading on the OTC by the end of next week unless the NASD is in on the conspiracy.
I'm sure every company loves to inflate it's projections, but when those targets cannot be achieved, they should act responsibly and advise the shareholders. I'll forward this to Dan Murphy, and allow him to comment on the seeming discrepancies that I have found, and I will post the results, if any. Anyone else can feel free to post their own corrections, if they have the data to substantiate.
Flame away...
Cnatman |
