from w-w-bb:

19.01.2007 - Total Rocketscience

The third and final company making up our Risk / Reward trilogy on shares for 2007 has so many investment negatives that most observers might not even give it more than a cursory glance. Although quoted on the London AIM market, it is based on the other side of the World, has reported revenues and cash flow of diddly squat and, more importantly, operates in an area of expertise so deep in boffinland that you need to be at least a 5 star techie to venture anywhere near it.

What originally persuaded us to give it a second look was the fact that legendary Stockmarket investor, Jim Slater, was pouring money into it via several successive rounds of financing. As we all know, Mr. Slater is a qualified accountant and hugely experienced corporate financier but clearly he is more at home in leafy Surrey than in the technologically rarified atmosphere of Southern California. However, he must have gleaned enough about what the company actually did to get extremely excited about it. In fact, by last Autumn, he had grown to like it so much that, to paraphrase the immortal Victor Kiam, he bought the remaining 51 % of the company that his vehicle, Original Investments, didn't already own.

The company in question was VIALOGY and, ever since it was fully reversed into Original just before Christmas, Slater's loyal band of followers have seen their highly speculative penny punt move on to the calculated risk category and been duly rewarded with a 50% shareprice improvement. We first latched on to this situation last April when we wrote a piece entitled The Cisco Kid ( see news archive ). To recap briefly, the company was set up by some brainboxes who had earlier worked together on supercomputing projects for NASA. Led by Dr. Sandip Gulati, the team appeared to have perfected software to detect and enhance extremely weak signals previously obscured by background noise. This may not seem particularly earthshattering to the layman but, apparently, the applications for this technology are not only revolutionary but almost limitless which suggests that an exponential rise in licensing income could well lie ahead.

Big news clearly travels fast on the Eastern seaboard because global behemoths Cisco and Boeing have already enlisted Vialogy to work on 2 major government inspired projects and these are just the ones that the company have been allowed to talk about publicly. As we reported in April, Cisco has contracted Vialogy to help with its IPICS programme which seeks to make sure that all emergency services and government agencies can communicate with each other quickly via computers and phones. The need to address this obvious requirement was highlighted by 9 / 11 when communications between different departments with different systems proved chaotic.

For its part, Boeing has recently confirmed that Vialogy has delivered a tenfold improvement in the accuracy and efficiency of the types of gyroscopes it uses in spacecraft and missile navigational systems. It is also known that both Cisco and Boeing see a major role for the technology in such areas as border controls and missile defence systems. Elsewhere a much smaller Texan company, Evolution Petroleum, is applying the technology to improving seismic evaluation of oil and gas deposits.

This initial clutch of applications is almost certainly just the tip of a very large iceberg that is going to float into view over the next few years and all that is required is a little patience. At todays price of 5.5p, Vialogy is valued at a mere 22m. To justify this valuation, the company would have to be earning say 2 million pretax. With cash reserves of 3 million and its heavyweight partners funding the projects it is involved in, Vialogy should be able to get through to breakeven without further recourse to shareholders. We would expect this stage to be reached sometime over the next 12 months. Thereafter, profits could / should escalate very dramatically as new applications and licensing income start to snowball.

On a two year view, shareholders could be rewarded extremely handsomely indeed. Vialogy is in so many ways akin to last weeks selection, CORAC. Both are now moving from the development stage to commercialization with the scales tipping away from blue sky risk towards the reality of cash flow. Both have mindblowing upside potential yet both have current shareprice action that makes drying paint look positively orgasmic. Although this presents an opportunity for latecomers, it is a frustrating byproduct of both companies involvement with highly sensitive technology and powerful, publicity shy partners. Moreover, the present lack of any meaningful numbers together with the sheer scale of future potential makes any serious stockbroker research well nigh impossible. All this will resolve itself in due course but, as they say in the Grolsch advert, all good things come to those who wait.

another good day and capped by the last trade being a 1 million buy

what is stirring this one, large volumes of shares traded, someone must be confident with the 1 million buy !

i did think it was the RHPS article last week, however now starting to think it cannot just be on the strength of that, as you ususally see some extra activity but not as much as we have seen

For someone to buy 70k on the back of an article must be very confident or has so much money that the 70k is pocket money to them. I haven't see this amount of volume for a long while for VIY. I really hope this is not another false dawn ! Come on VIY !!

and yet another 1 million buy just gone through this morning

RNS Barclays increase shareholding to 7.01%

going very well today, significant re-rating looks on the cards with this one.

Yes - nice to see it picking up at last!

Now waiting for EK to bail out of his short ...!??

I can't believe he's still shorting this ....he doesn't give in easily sometimes...

I am not saying he is right or wrong ( although hope he is wrong)

However he has been a lot more successful than most of us...........is he still shorting or has he taken the knock

To the best of my knowledge he is still shorting this.....he is a fantastic expert on the markets though, you have got to hand it to him...I hope he's wrong on this one...the sp at he moment says so...perhaps he's doing what he's done with GKP and that is shorting temporarily and going long at the same time...

Breaking all records at 7p looking good.

actually EK gets a fair number completely wrong, and VIY is clearly one of those
short hop skip and a jump to 10p+, on strong news you will struggle to buy these in single figures again.

i just came across a curiosity dated 10/10/07 .... they were assuredly stocks that someone had rated strongly for the the coming year

VIY ...... mid price then 9.25 ....... close of biz today 4.85

OXB ...... mid price then 35.75 ....... close of biz today 14.25
AZM ...... mid price then 80.0 ....... close of biz today NIL (bankrupt)
BLZ ...... mid price then 67.25 ....... close of biz today 48.0
BVC ...... mid price then 31.0 ....... close of biz today 52.5


good innit!
the only winner is BVC, which to give MRSI his due, he has always promoted.
The others are shit and worse!

Disappointing to see VIY slipping downhill yet again. I had been in profit in recent weeks and thought they'd continue to creep up...

Not very happy about this either but in the absence of an update the sp is slipping and the spread is now ridiculous once again...shall hold till next rns which I would like to think should be positive.

no volume so probably market makers trying to find buyers

Business Financial Newswire
"ViaLogy has reported a loss of 2.558m for the half-year to end-September, including 1.43m for amortisation and depreciation. The cash outflow from operations was 1.24m.

The amortisation charges relate to the value of ViaLogy's Intellectual Property and associated research and development, which is amortised over a period of six years.

During the period ViaLogy raised a total of 3.62m before expenses.

On 5th May 1.637m before expenses was raised by conversion of warrants. A placing of 49,564,800 new shares on 18th August raised a further 1.982m before expenses.

The company said it made considerable progress during 2009. It is barely 18 months since the company commenced proof-of-concept trials for its QuantumRD oil & gas exploration data analysis product.

ViaLogy said during the last six months, it has developed a growing list of contracted new customers for QuantumRD. "

See Michael Walters site.