***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,
Since the last issue, we have closed four positions; three for some very hefty gains, and one for a loss.
MIPS TECHNOLOGIES (5/20/03). Closed position 8/29/03 at $4.23 for a 63% GAIN.
MAGIC SOFTWARE (3/20/02). Closed position 8/26/03 at $3.05 for a 85% GAIN.
SONIC INNOVATIONS (5/5/03). Closed position 8/21/03 at $6.38 for a 77% GAIN.
AVAX TECHNOLOGIES (3/20/01). Closed position 8/20/03 at 28¢ for a 87% LOSS.
Ever since we picked MIPS Technologies, back in May, it pretty much had been moving steadily upward, and, then, last week, soared on news that it was combining its Class A and Class B stock into one common share. Magic Software, which had been basing for the last few months, took off on news of a deal with Vadim and a good-looking quarterly report. Sonic Innovations had risen nicely over the last month, and, finally, had a nice upside breakout. As for Avax Technologies, we have lost hope and closed it for a bad loss (of course, all losses are “bad”).
By now, you have heard that September is an ugly market month 90% of the time. However, barring some sort of domestic or global upset, we feel this September may be much different. We could even see the NASDAQ touch 2000, again, and the Russell 2000 could go crashing way above 500.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
New York Health Care (BBAL) (3/20/97). 2nd QT numbers look good thanks to the BioBalance acquisition. BioBalance expands GI pipeline with new biotherapeutic agents. After seven years, there may be some hope here.
Hauppauge Digital (HAUP) (2/5/01). Quarterly loss mostly due to European slump, but balance sheet still seems good. Launches Network Media Decorder, bridging TV sets and PCs via home LANS.
CE Franklin (CFK) (5/5/01). Second quarter results.
Arotech (ARTX) (6/5/01). Introduces industry’s first firearm diagnostic unit called The Range FDU.
Superconductor Technologies (SCON) (1/5/03). Receives judge’s final ruling on ‘215 patent infringement lawsuit.
VASCO Security (VDSI) (2/5/02). Launches Digipass Pack for Microsoft Outlook Web Access. Remember back in March when this one had dropped to under a buck, as had a lot of others in the Portfolio? What a difference a rampaging bull makes.
Catalyst (CLYS) (3/20/02). Daydots chooses company for supply chain execution project. This one’s on the “Endangered List”.
Hemispherx (HEB) (7/5/02). Enters into sales pact with Engitech for Alfteron N. Second quarterly numbers reflect slight increase in cash.
Millennium Cell (MCEL) (9/20/02). Gets a nice plug at Forbes.com as one of five wireless innovators to watch. Fuel cell boat tested in Newsport Beach, CA harbor.
Viewpoint (VWPT) (11/20/02). Announces corporate restructuring. This, too, is on the “Endangered List”.
Misonix (MSON) (5/20/03). Reports record revenues and increased earnings for FY ending 6/30/03; balance sheet still looks good.
Sequenom (SQNM) (6/5/03). Reports discovery of significant diabetes risk genes.
Syntroleum (SYNM) (7/5/03). Introduces low-cost barge mounted gas-to-liquids plant to develop worldwide stranded natural gas reserves.
Paradyne (PDYN) (7/20/03). Receives TTC Japan spectral management classification for ReachDSL.
Art Technology (ARTG) (8/5/03). Settles $11.8 million excess lease obligation.
NIC (EGOV) (8/5/03). Oklahoma State web site launches new online services for accountants with EGOV solutions.
Marimba (MRBA) (8/20/03). Partners with Celestix to deliver linux-based hardware appliance for on-demand software management.
In this issue, our new picks are another specialty semiconductor and another broadband play.
NEOMAGIC CORPORATION (NASDAQ: NMGC) – $2.00. Twelve-month hi-low has been $2.70 – 73 cents. Based in Santa Clara, CA, with about 150 employees, this semiconductor has 30.45 million shares outstanding, $53.17 million in total current assets, $64.54 million in total assets, $2.2 million in long-term debt, and $8.68 million in total current liabilities. Institutional ownership is around 24%. http://www.neomagic.com
As many of you know, certain gurus think that the recent market runup, driven mainly by tech stocks, is due for a bad ending, soon. We have our doubts about that, and feel that small semis, like NeoMagic Corp., are about to join the party.
Founded in 1993, the company, which bills itself as the pioneer of embedded memory and logic technology, develops and markets high-performance semiconductor solutions, known as Applications Processors, for sale to OEMs and original design manufacturers of hand-held systems. NeoMagic targets the manufacturers in three consumer end-product markets, namely mobile telephones, personal digital assistants (PDAs), and hand-held entertainment gizmos. Application processors are semiconductors, or system-on-chips (SOCs for short), used to enable multimedia applications and operating systems multitasking on hand-held systems.
Sold under the name MiMagic, the company’s SOCs applications have won several awards and nominations. Although NeoMagic began by mobilizing multimedia for notebook PCs, it has shifted strategy toward providing SOCs for the next generation of handheld Internet appliances. To date, NMGC has shipped over 22 million units of its multimedia accelerators.
In recent months, DejaView, Inc. started using the company’s chips to power its Model 100 hands-free wearable video camera. Also, Neonode Corp. selected MiMagic 3 to power the multimedia capability in its N1 mobile multimedia handset. The N1 is a low-cost handset designed to provide such applications as digital camera, multimedia messaging and mobile gaming, along with cellular phone functionality. Recently, NeoMagic launched the MiMagic 6, which is scheduled to ship at the end of this year.
For the FY, ending 1/31/03, revenue was $2.18 million with $35.1 million in losses. During the first six months of this FY, ending 7/31/03, revenue was $846,000 with $13 million in losses. Over the years, this company has shown staying power. It is now in a transition and is re-positioning itself in the hand-held marketplace. Can NeoMagic pull it off? It seems to have a good shot at it.
Our 24-month target for the stock is $3.50 to $4.00.
For more information, call NMGC’s Willa McManmon at 408-486-3955; wmcmanmon@neomagic.com
TUT SYSTEMS, INC. (NASDAQ: TUTS) – $3.50. Twelve-month hi-low has been $4.75 – 41 cents. Located in Pleasanton, CA, with about 120 employees, this communications equipment provider has 20 million shares outstanding, $24.6 million in total current assets, $30.8 million in total assets, and $6.84 million in total liabilities, of which $3.4 million is long-term debt. Institutional ownership is around 32%. http://www.tytsys.com
In case nobody has noticed, prices for broadband access have been falling like rocks, and the explosion appears to have begun. We feel that Tut Systems, Inc., with the help from a recent acquisition, should be a big beneficiary of this broadband boom.
Founded in 1991, and, yes, named for that King Tut, Tut Systems designs and sells video content processing systems for deploying the next generation data and video services over broadband networks. These systems are optimized for providing public broadcast digital television services across telephone company and cable company facilities; digital video trunking systems for applications across television broadcast; government and educational facilities; and broadband data transmission systems for application over existing private campus or building facilities. The company, which derives most of its sales from its broadband data transmission systems, continues to focus and expand its position in what is known as the multi-tenant market, i.e. apartments, hotels, college dorms, and commercial buildings.
To expand its broadband product and market strategies, last November (2002), Tut acquired VideoTele.com (VTC) from Tektronix, Inc. VTC offers digital head-end (DHE) solutions enabling home entertainment delivery via the broadband Internet. Now, Tut is able to extend its product offerings to include video content process and video trunking systems, mentioned above. The company sells its products worldwide, with Fortune 500 companies as a core customer base.
At the end of July, Tut had several pieces of news that should bolster future revenues. First, Tut and Siemens AG partnered to win Portugal Telecom’s ConcePT hotel program. Then, Wamego Telecommunications and Cameron Communications both announced they will be using a Tut solution to deliver digital TV services. Finally, Duo County and Dumont Telephone will offer digital tier cable TV service using Tut products.
For FY2002, ending 12/31/02, revenue was $9.37 million with $41.62 million in losses compared to FY2001 revenue of $13.74 million and $104.3 million in losses. During the first six months of this FY, ending 6/30/03, revenue was $14.46 million with $4.26 million in losses. The acquisition of VideoTele appears to be helping both the top and bottom lines.
As we said, we see a massive explosion in broadband now developing and TUTS seems well-positioned to capitalize on it.
Our 20-month target for the stock is $5.75 to $6.50.
For more information, call TUTS Amanda Pires at 925-201-4393; apires@tutsys.com
Look for the September 20, 2003 issue to be posted on 9/16 or 9/17.
Thank you,
George