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Dear Reader,
Since the last Newsletter, we closed another position.
ANALYSTS INTERNATIONAL (2/5/04). Closed position 9/30/04 at $4.58 for a 54% GAIN.
During the last four days of September, Analysts Int’l had pretty heavy trading volume on no apparent news, so, the 54% gain looked ripe for picking. Also, please note that Zi Corp. has gone through our 50% threshold and we will be closing this, quite soon.
September is usually one of the worst months for the markets but this one was a little different. Yes, it wasn’t good, but, considering all of the conflicting news it could have been much worse. The threat of domestic terrorism has intensified as elections draw near; crude topped $50; interest rates edged up; and, despite the polls giving Bush the lead, no one really knows who will win. With this kind of background the Dow could quite easily have been at 9000 and NASDAQ at 1600, but they are not. So, there’s the good news.
Some of the stocks in the Current Portfolio seem to be rebounding, somewhat, after a rocky summer. But, as we said in the last Newsletter, most of our picks appear to be very oversold.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommend them.
Arotech (ARTX) (6/5/01). Subsidiary FAAC receives $1.3 million in orders for driving simulators and incident command trainers.
ViroLogic (VLGC) (7/20/01). Company and ACLARA mail definitive proxy for proposed merger.
Generex (GNBT) (8/5/02). Establishes CRADA with the Uniformed Services Univ. and the Henry M. Jackson Foundation for Novel Her-2/neu vaccine studies and clinical trials at Walter Reed Medical Center in patients with breast cancer.
Art Technology (ARTG) (8/5/03). Updates shareholders on proposed acquisition of Primus Knowledge Solutions.
Trio-Tech (TRT) (10/20/03). Although FY2004 was a little disappointing, 4th quarter came in at 3¢ EPS; balance sheet still seems decent.
Active Power (ACPW) (11/20/03). Unveils new technology: thermal and compressed air energy storage is first minute-for-minute battery alternative.
AVANT Immuno (AVAN) (12/5/03). Publishes results of TP10 Phase 2 study in circulation.
Actuate (ACTU) (1/5/04). CE Unterberg initiates coverage. Appeals court upholds ruling in ACTU’s favor. Reports that numerous companies have switched to Actuate from Brio, Cognos, and Crystal.
OpenTV (OPTV) (3/20/04). Roth Capital initiates coverage. Inks porting and licensing pact with Scientific-Atlanta. Signs multi-year license agreement with UnitedGlobalCom.
NexMed (NEXM) (4/5/04). Announces IND filing of InnoNyx for nail fungal infection.
GlowPoint (GLOW) (5/20/04). U.S. government expands use of GLOW video services.
Altair Nanotechnologies (ALTI) (6/20/04). Receives second contract from U.S. DOD for $672,000.
Zi Corp. (ZICA) (6/20/04). Series 60 platform to use ZICA’s eZiText and this news seems to have sent the stock on a nice run, and, as we said above, we will be closing this, soon.
Avanex (AVNX) (7/20/04). Announces commercial shipment and field deployment of its PowerNode platform. Auditor resigns.
GigaMedia (GIGA) (7/20/04). Reports first ever profitable quarter; balance sheet still looks healthy.
Vitria (VITR) (9/5/04). NordCom of Italy selects Vitria for its civil protection office in Lombardy.
Intraware (ITRA) (9/20/04). Bivio Networks extends agreement for the ITRA SubscribNet Service. Inks pact with Bankers Systems. Second QT results so-so; balance sheet still appears okay.
V.I. Technologies (VITX) (11/20/03). Company reschedules special shareholders meeting, again. This is looking a little squirrelly to us, so, we are adding it to the “Endangered List”.
Our picks for this issue are two more NASDAQ-traded small techs.
TRIKON TECHNOLOGIES, INC. (NASDAQ: TRKN) – $2.05. Twelve-month hi-low has been $7.58 – $1.83. Located in Newport, South Wales (UK), with about 260 employees, this semiconductor supplier has 15.8 million shares outstanding, $49.23 million in total current assets, $67.24 million in total assets, little long-term debt, and $24.1 million in total liabilities. Institutional ownership is around 22%. One analyst rates the stock a “moderate buy”. http://www.trikon.com
Trikon Technologies, Inc. appears to be another beaten-down small tech with a pretty good-looking balance sheet. So, we add this one to the Current Portfolio. Incidentally, it may be our first ever pick located in Wales, and, yes, it has an U.S. sales force.
Trading on NASDAQ since 1995, Trikon manufactures and markets production equipment used to process semiconductor wafers for the manufacture of integrated circuits. The company claims to be a leading supplier in three core technologies in the semiconductor industry – PVD, CVD, and Plasma Etch. Its products are used in processes to create the integrated circuit, which includes basic operations to create interconnect layers, such as deposition or adding material to a substrate, typically a silicon wafer; patterning or printing a circuit outline on the substrate, and etching or removing layers of material from the substrate. Trikon focuses on high growth end-markets including wireless, communications, consumer, and opto-electronics.
In September, the UK government awarded funding to Trikon to develop a Broad Ion Beam Deposition (BIBD) system for nanotechnology, or MRAM manufacture. The total value of the award is up to 50% of the total project value of $5.92 million, with the project slated to last 18 months. At the end of August, Trikon announced it had received a repeat order for a Delta CVD dielectric system from WIN Semiconductors, one of the leading pure play GaAs foundries. This system will complement existing Trikon tools sited in WIN’s 150mm production line in Taiwan and will be used for producing HBT, pHEMT, and mHEMT GaAs products.
For FY2003, ending 12/31/03, revenue was $28.8 million with $24.63 million in net losses versus FY2002 revenue of $32.8 million and $19.64 million in net losses. During the first six months of the FY ending 6/30/04, revenue was $16.95 million with $10.6 million in losses. We think that semiconductor stocks are nearly at their lows and Trikon’s stock price appears to be cheap, so, why not take the bet?
Our 20-month target for the stock is $4.25 to $4.50.
For more information, contact TRKN’s Katrina Bomont at katrina.bomont@trikon.com
CORIO, INC. (NASDAQ: CRIO) – $1.50. Twelve-month hi-low has been $4.50 – $1.12. Based in San Carlos, CA, with about 300 employees, this application software provider has 63.6 million shares outstanding, $44.48 million in total current assets, $73.68 million in total assets, little long-term debt, and $31.13 million in total liabilities. Institutional ownership is around 18%. One analyst rates the stock a “moderate buy”. http://www.corio.com
And, once more, we go trawling for banged-up techs with good-looking balance sheets and that are near their 12-month lows, and, so, we add Corio, Inc. to the Current Portfolio.
Trading on NASDAQ since 2000, Corio is an enterprise application service provider that delivers enterprise applications over a secure global network for a fixed monthly fee. The company operates through two lines of business – application management services and professional services. Application management services consist of ongoing services for business software application systems, which often includes providing the computers, data center facilities, and networks to support software applications. Corio’s professional services consist of discreet projects on behalf of customers. The solutions Corio provides its customers are services related to enterprise software applications provided by the likes of Oracle, PeopleSoft, SAP, Ariba, Siebel, and E.piphany. Some of Corio’s customers include Visa, U.S. Coast Guard, Toshiba, U.S. SBA, Plumtree, National Gypsum, Bertelsmann, and Birkenstock.
A few weeks ago, Mersiant chose Corio’s Applications on Demand (AOD) to support its enterprise applications. Also, last month, Plumtree Software went live with AOD for their enterprise financial applications. In August, THOR-LO, Ingersoll-Rand Club Car, and eMeter either selected or extended contracts for AOD to support applications.
For FY2003, ending 12/31/03, revenue was $68.7 million with $12.86 million in losses versus FY2002 revenue of $56 million with $36.1 million in losses. During the first six months of this FY, ending 6/30/04, revenues were $35.26 million with $6.1 million in net losses.
Corio seems to be maintaining revenue growth while hacking away at the losses. The company also appears to be attracting new business at a pretty nice clip. This stock also seems cheap at these prices.
Our 20-month target for the stock is $2.75 – $3.00.
For more information, contact CRIO at 650-232-3000; ir@corio.com
Look for the October 20, 2004 issue to be posted between 10/15 to 10/19.
Thank you,
George