***We no longer follow the companies mentioned in these backdated newsletter issues. These samples of past newsletters are generated to give you an idea of what you can expect when you subscribe. Please do not use any of the information contained in the samples below as current advice. If you would like to purchase a newsletter subscription, please click here. ***
Hello Readers,
No need to check the Track Record page for the last few weeks, because we didn’t close any positions since the last Newsletter. Also, in that period, the markets weakened even further, mostly due to what the gurus are calling “earnings’ misses”. Actually, many bellwether stocks came within estimates but fell short of the “high end” of expectations. Gimme a break! As a result, selling pressure prevailed.
However, we still feel the overriding factor that is weighing on the markets is the uncertainty over the upcoming election, and Kerry’s selection of trail lawyer Edwards has added to investor nerves. Oh, and let’s not forget the terror factor. The markets could go on a mild tear if the Democratic Convention is terror-free and if Kerry doesn’t get a big poll bounce after it is over. Remember, the markets still prefer Bush, even if they don’t really love the guy.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
DOR BioPharma (DOR) (9/20/00). Last issue we were tempted to place this on the “Endangered List” again, but now they teased us by completing enrollment in a pivotal Phase 3 clinical trail of orBec for acute intestinal Graft-versus-Host disease. Also, announces top management changes.
Digital Power (DPW) (2/20/01). Receives financing from Telkoor Telecom and Forton/Source through equity investments totaling about $500,000.
CE Franklin (CFK) (5/5/01). Signs letter of intent with Smith Int’l to buy their Wilson distribution operations. This would dilute CFK stock but give them combined revenues of about $1 billion annually. Wait and see.
Arotech (ARTX) (6/5/01). Stock comes under selling pressure as ARTX plans to buy Armour of America for $22 million. Company announces $6.6 million direct equity placement. Subsidiaries receive new orders totaling about $2.7 million.
ViroLogic (VLGC) (7/20/01). Cuts 2004 revenue outlook due to a customer delay. Brokerage downgrades stock.
VASCO Security (VDSI) (2/5/02). Singapore bank to use Digipass GO3 strong authentication for retail banking; same for Bendigo Bank of Australia. To release quarterly results on July 22.
Generex (GNBT) (8/5/02). Closes on initial $1.75 million private placement.
Art Technology (ARTG) (8/5/03). Opens second education center for IBM software. Announces preliminary 2nd QT results which are guided downward due to several deals being delayed, including a multi-million dollar government contract.
Targeted Genetics (TGEN) (10/5/03). Expands AAV patent portfolio.
Insmed (INSM) (11/5/03). Receives ok for reimbursement for SomatoKine named patient program from France and Italy. And, in case you missed it, Insmed stock price is way off since the last Newsletter, as are the stocks of many biotechs, which have felt pressure for a variety of reasons.
V.I. Technologies (VITX) (11/20/03). Panacos unveils new kind of AIDS drug.
Active Power (ACPW) (11/20/03). To announce quarterly results on July 28.
AVANT Immuno (AVAN) (12/5/03) Mexico approves Rotarix vaccines for marketing for the prevention of severe gastroenteritis in infants. Earnings call set for July 22.
Actuate (ACTU) (1/5/04). Added to the Russell 3000 index. Earnings call scheduled for July 29.
Analysts Int’l (ANLY) (2/5/04). Achieves Gold Certification from Cisco Systems.
Somera Communications (SMRA) (2/20/04). Earnings call set for July 21.
Oplink (OPLK) (2/20/04). To report 4th QT and FY 2004 results on July 29.
Transgene (TRGNY) (3/5/04). Manufactures clinical lots of HIV vaccine candidates for the EUROVAC Project.
OpenTV (OPTV) (3/20/04). Settles patent litigation suit with Disney.
Socket Communications (SCKT) (3/20/04). Earnings call scheduled for July 21.
NexMed (NEXM) (4/5/04). Signs agreement with Schering for Alprox.
GoRemote (GRIC) (5/5/04). GRIC and Kyocera relationship delivers early wins. Delivers mobile productivity for CHAMP Cargosystems.
Emcore (EMKR) (5/20/04). Estimates 3rd QT revenues up 25% from a year ago, but predicts 9% slump from 2nd QT.
GlowPoint (GLOW) (5/20/04). Selected as exclusive provider of video communications services at Wainhouse Research Summit.
Network Engines (NENG) (6/5/04). Extends security distribution partnership with VASCO (our pick from 2/5/02).
Bindview (BVEW) (6/5/04). Presents IT security seminar. Announces support for network access protection technology for Microsoft. Wins “Best Security Solution” award. To announce 2nd QT results on July 29.
Genus (GGNS) (7/5/04). One day after we posted the last Newsletter, it was announced that Genus will be merging with AIXTRON, a German company. Genus shareholders will receive 0.51 ADRs of AIXTRON in exchange for each Genus common share and these ADRs will trade on NASDAQ. This could be a good deal. Let’s see. Expect more consolidation of this sort in the tech sector as time goes on.
Metron (MTCH) (7/5/04). Narrows 4th QT loss and reports revenues up 18% over the 3d QT. Year over year revenues are about the same, but losses have been trimmed by about $10 million.
Our picks for this Newsletter are another semiconductor and an Internet Service Provider in Taiwan, both trade on NASDAQ.
AVANEX CORPORATION (NASDAQ: AVNX) – $3.30. Twelve-month hi-low has been $7.57 – $2.55. Based in Fremont, CA, with about 200 employees, this semiconductor has 143.3 million shares outstanding, $188.36 million in total current assets, $314.35 million in total assets, and $136.22 million in total liabilities, of which $12.3 million is long-term debt. One analyst rates the stock a “strong buy”, one a “moderate buy”, and one as a “hold”. Institutional ownership is around 17%. http://www.avanex.com
Periodically, we look back to the “nose bleed” stocks of 2000 to see if any of them are still around and if they have a shot in the future. Surprise, surprise. Avanex Corporation, which hit $208 in February 2000, seems to be hanging in there.
Trading on NASDAQ since early 2000, Avanex is a global provider of what it calls Intelligent Photonic Solutions to meet the needs of fiber optic communications networks.
Telecommunications system integrators and their network carrier customers use the company’s photonic processing solutions for greater capacity, longer distance transmissions, improved connectivity, and higher speeds. These solutions enable or enhance optical wavelength multiplexing, dispersion compensation, switching and routing transmission, amplification, and network managed subsystems. In sum, Avanex’ photonics are designed to increase the performance of optical transmission systems, which need almost endless upgrading.
Avanex maintains facilities in CA and NY and also in Europe and Italy. In 2003, the company went on a mini-acquisitions spree and now offers a full range of solutions in passive and active optics, optoelectronics integration, and software and interface controls.
At the end of June, Avanex chose Aegis Semiconductor as a primary supplier for its PowerWatcher network ready optical channel monitor. In May, the company enhanced its PowerReach full C-Band tunable transponder so as to improve technical performance. Also, in May, AVNX shipped its patented Dispersion Compensation Solution to more than 20 customers for trails and field deployments – something to keep an eye on.
For the FY ending 6/30/03, net revenues were $21.4 million with a net loss of $103 million (yikes!). During the first nine months of the current FY, ending 3/31/04, revenue was $75 million with around $102.5 million in net losses.
Obviously, the losses are scary, but thanks to acquisitions AVNX has greatly improved revenues. This, like some of our other recent picks, is dependent upon continued rebirth in the semiconductor industry.
Our 24-month target for the stock is $6.00 to $7.00.
For more information, contact AVNX’s Mark Weinswig at 510-897-4344; mark_weinswig@avanex.com
GIGAMEDIA, LTD. (NASDAQ: GIGM) – $1.00. Twelve-month hi-low has been $3.70 – $1.03. Located in Taipei, Taiwan, with about 620 employees, this Internet service provider/entertainment services company has 50.2 million shares outstanding, $57.9 million in total current assets, $120.39 million in total assets, little debt, and $26.3 million in total liabilities. Institutional ownership is around 4%. http://ir.giga.net.tw/introduction.htm
Like Avanex above, GigaMedia, Ltd. also hit “nose bleed” levels in 2000 when the stock was around $70. With what seems to be a pretty good balance sheet, this one is for you dollar junkies.
Trading on NASDAQ since 2000, GigaMedia is a holding company and, through several subsidiaries, distributes recorded music and provides broadband Internet access and online entertainment services in Taiwan. Through its subsidiary G-Music, the company operates Taiwan’s two largest music store chains, which are Rose Records and Tachung Records. Both were acquired in 2002 and together hold about 50% of the island’s current market share. Then, through subsidiary Hoshin GigaMedia, it provides Internet access service and broadband content with multiple delivery technologies. Besides offering ADSL, GIGM’s broadband access is capable of offering speeds at up to 100 times faster than dial-up. With 20 system partners, GigaMedia’s cable modem business passes more than 3.1 million Taiwan households and 417,000 small and medium sized businesses.
Through another subsidiary, KBT (Koos Broadband Telecom), GIGM provides broadband service exclusively to corporate customers. Of particular interest, back in April, the company acquired Boston-based Grand Virtual for over $32 million in cash that came from existing working capital. Grand Virtual develops software for online entertainment services, including online gaming and social networking, which it sells mostly to online licensees in Europe and Asia.
For FY2003, ending 12/31/03, revenue was $96.7 million with $14.3 million in losses compared to FY2002 revenue of $73.65 million and $18.4 million in losses. During the 1stQT of this FY, ending 3/31/04, revenues were $27.25 million with $775,107 in losses.
No, we have not a clue as to why the stock is bumping at around a dollar. The company is showing revenue growth and smaller losses. Also, there’s Grand Virtual hanging out there, and we doubt GigaMedia shelled out $32 million cash for kicks and giggles.
Our 20-month target for the stock is $2.00 to $2.50.
For more information, contact GIGM at ircs@corp.giga.net.tw
Look for the August 5, 2004 issue to be posted on 8/2 or 8/3.
Thank you,
George