Dear all,

After studying market trends I have come to the conclusion, rightly or wrongly, that last years worst losers are often the winners of this year and the next.

Some of you may realise this is why I went into mining sector from October 1999 after the BRE-X sell off from March 1997, I am hoping I can repeat this in TMT stocks, as indeed 2001/2002 has been for me in Insurance Stocks at Lloyd's post WTC and September 11th 2001 (average ILV rise 55.54% per yesterday's close 12 ILVs 01.10.2001-14.12.2002).

My conclusion is based on a typical bull or bear phase lasting up to 34 trading months to 68 trading months (actually trading periods of 21 days, actual periods of 28 days or moon cycles IMHO).

Although bearish on equities generally, ie expecting a double dip recession, with bottoms in place at around 31.80 months on FTSE (close on 34 moon cycles) on 24th September 2002, from high on FTSE of 6950.60 on 30th December 1999, plus further low I expect either at 55 moon cycles or at 68 moon cycles, I am still bullish short term, say to March 2003, then again to June 2003 on Telecoms.

The reason is simple, I really do not think certain stocks can go down any further indeed the sector has been rising dramatically on the least sniff of a bull market, and when telecoms rise they rise fast (refer TWT 1.10p to 4.75p in three days recently)IMHO.

I therefore had a look at the sector to try and find the stock which to me seemed the most undervalued, most bombed out with the strongest fundamentals on cash asset backing, lowest gearing, and lowest cost per pound of revenue, plus a market capitalisation below my US$50m (&pound31.25m-&pound33.33m)threshold with the greatest upside potential risk/reward ratio IMHO.

The latest interims to 30th September 2002 released on 21st November 2002 stated certain elements I very much liked including:-

Cash &pound10,155,000 per 30.09.2002 I calculated 0.364p per share over 2,789,070,648 shares in issue at reference date.

Gross profit up 40.3% on same period last year to &pound9,389,000, I assumed this continued full year implied x 2 =&pound18,778,000

Debt seemed to have been reduced from &pound22m per ADVFN data, implying net gearing 55.59% to just &pound436,000.

My maths said can this be right is RED really only costing at 0.60p offer say &pound16,734,000, ie &pound7,015,000 net cash &pound10,155,000 plus debt &pound436,000 for a business with a &pound76m to &pound86m estimated annual turnover?

Less than 10p in the pound?

Press release data included as follows:-

"INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002

Redstone, the national communications services provider, announces its financial
results for the six months ended 30 September 2002.


FINANCIAL HIGHLIGHTS


Further progress on margins and cash from continuing operations:

O Gross profit up 40.3% on same period last year to &pound9.389 million. Gross
profit now represents 25.5% of revenues, up from 16.6%, and also up from
23.0% in the 6 months to 31 March 2002.

O Operating loss before goodwill amortisation and impairments reduced by
77.5% to &pound1.998 million from &pound8.876 million.

O EBITDA loss reduced by 81.7% to &pound0.990 million from &pound5.418 million.

O Revenue increased marginally compared with the 6 month period to 31 March
2002, which, as set out in the Annual Report, was down from the period to
30 September 2001 reflecting management's focus on margin enhancement.

O Operating costs excluding goodwill amortisation and impairments reduced
by 27.0% to &pound11.567 million from &pound15.849 million at 30 September 2001.

O Cash balances at 30 September of &pound10.155 million.

O Borrowings at 30 September of &pound0.436 million.


OPERATIONAL HIGHLIGHTS

O Increased sales and marketing headcount, during the period, to 102 as at
30 September 2002.
O Order intake improved during the period, with key contract wins notably
in IP telephony systems.
O Awarded Cisco "GOLD" accreditation status.
O Continued reorganisation to improve customer service and efficiency
whilst reducing cost.
O BT Wholesale partnership completed."

The all important charts, after a somewhat over enthusiastic rise last week when RED went up 79.78% day 1 0.445p to 0.80p (high 0.835p), and a further 38.75% day 2 high to 1.11p, before not unsurprisingly profit taking or short selling, RED has today completed a hammer bottom intraday reversal from 0.49p mid to 0.56p mid, which I count as a bullish signal:-



Longer term charts show I think March 2000 high per ADVFN at around &pound10.10/&pound10.20, somewhat irrelevant I understand only approx 86m shares out then even so market cap was &pound868.60m to &pound877.20m, now there are around 2,789,070,648 shares out per 30.09.2002 RNS 21.11.2002 I calculate this market cap would represent 31.14p to 31.45p over no in issue above.

Still a fair risk reward ratio IMHO at 0.60p

I am not sure of a fair short term target, but 1.12p is US$50m, after which I would expect institutional attention. My gut feeling is telecoms can trade to 2.50 to 3.00 times annual turnover, if so 2.50x &pound76m to &pound86m equates to &pound190m to &pound215m to 3 x equates to &pound228m to &pound258m.

Whichever way I looked at it I thought RED was worth 6.80p to 9.25p over the above number of shares in issue.This still represented in excess of a 10 to 1 to 15 to 1 risk reward play to me, although doubtless I will trade the volatility on the way.

All IMHO, NAG, DYOR etc, etc

Comments bull bear welcome, I am long.

Best regards

Ash

that'll be DCB shorting it again ;-)

Robber,

I doubt it, I don't think he has the muscle or the following to make a blind bit of difference!

Cheers

Ash

robber - lol

dcb

DCB,

So Bullie has not banned you then?

I assume you have just been spending your time per usual on ADVFN, rather than contributing to MoneyAM.

Oh well, I am sure you will return to personal abuse sooner or later.

I am waiting!

Cheers

Ash

Mr AJ - just to put the record straight, I believe it was you who rec'd this site's first yellow card while it was still in beta and had an abusive post of yours edited. Selective memory attack? Best not talk about people being banned from bulletin boards with your extensive record.

PS No, I'm not short red!

Robb,

No I am not sure, there is no yellow card on my user profile, I do not think I classify as an abusive poster, indeed very seldom do I post anything vaguely one could consider abusive, despite huge amounts of provocation to do so.

I try to restrict my criticisms to the companies in the stockmarket, the behaviour of their directors, rather than attack other posters therein ruining an open discussion forum on equities for all.

I really do not think Bullie views me as the cause of this rather consistant set of unpleasantaries imported from ADVFN onto MoneyAM, nor as someone who has posted any abusive commments.

I have made a formal complaint to Bullshare and will continue to do so as and when I am the target of unwarranted abuse and harrassment from DCB and his cronies.

I shall also lobby extensively with other users to ensure anybody who posts abusive comments on this BB gets banned.

The control of BB abuse is actually one of the most important MoneyAM cards to play, most posters myself most of all are sick to death of BB posters harrassing, attacking personally, and effectively verbally abusing other posters.

Wishing you a pleasant nights sleep, I hope the bugs don't bite!

RIGHT ENOUGH SAID PERHAPS WE COULD NOW GET BACK TO DISCUSSING WHETHER REDSTONE TELECOM PLC IS GOOD VALUE AT 14,610,000 MARKET CAP WITH 10,155,000 CASH PER 30.09.2002 AND TURNOVER OF 76M TO 86M?

Cheers

Ash

Robber, you are right about selective memory. Here is the post from Mike -

"Bullshare - 23 Dec'02 - 09:08 - 42 of 44

Ashley James. I have edited your post, A simple apology to DCB would be in order, facts actually speak louder than your words. If you want to make personal attacks can you cross over the road .

Yellow Card number 1

Mike"

The apology for Mr james lie, by the way, never materialised. Further accusations by Mr Ashley James yesterday were that I pretended to have read a book on Fibonacci Analysis to make my comments look good. So much for n-n-abuse. Lol.

dcb

DCB,

Have you any idea how your posts make you look in the eyes of other people?

Now I accept you are doing everything humanly possible to ruin this thread, but some of us are here to discuss equities and to make money trading shares in the market.

So please if you wish to continue to endeavour to wreck a peaceful, pleasant and informed BB discussion arena, enjoyed by so many, can I suggest you do so at the home of BB abuse and unpleasantness on ADVFN where I understand you and your clique are very much welcome, indeed encouraged to post your commentry and personal attacks.

Anyone else interested to discuss the equity named in the header,

I am somewhat pleased to see Redstone starting to recover it's losses of yesterday currently up 4.70%, a welcome show of strength after the drop from nowhere yesterday.

The stock has now risen above 8 day EMA support, indeed with a rising MACD and stochastic looks in a far more positive phase of shareprice movement.



Hopefully this time onwards and upwards.

Cheers

Ash

Ash
You are getting too sensitive about DCB. The best policy is to ignore anyone who is attacking you, otherwise it protracts the problem and other posters see you as both to blame. Just keep posting the technical stuff and only reply to technical comments. You will be a lot happier and so will WE who have to read it all. ADVFN seems not to mind these personal bouts, I doubt that either of you will survive on here unless you both cool it.

AJ - suggest you listen to Haystack because when you get caught with the lying and bullshit you don't look too clever.

Well said Haystack

regards

Robb
That's exactly the sort of response that ADVFN don't seem to mind. I hope it may be different here. That's just my personal opinion. I must say I have never found Ash to be a liar. He gets a tad (that's tad and not TAD) too enthusiastic sometimes and his optimism clouds his judgement but that's about all. I am sure the same could be said about a few of us at times.

Haystack - you've got a classic above. He claims he's abused and is the innocent party but when you mention that maybe he is the naughty boy he totally denies it and then when someone puts up the relevant posting brings on the holier than thou we're all here to make money and talk about shares attitude. There's a reason that he was banned from advfn at least twice to my knowledge and also from previous boards before that. There's also a reason why DCB has never been banned from any bb to the best of my knowledge. Anyway US is open, thats me over and out.

Regards
Rob

Robb - thanks. You took the words out of my mouth.

Haystack, unfortunately there are some things that just rile me beyond measure and a manipulative liar is one of them. The yellow card he got was for lying. My apologies to the rest of the BB popluace for giving vent to temper. I will try harder to exercise control :-) (repeat 100 times)

dcb

DCB,

Sounds like you are losing control of yourself. Sometimes it is adviseable to switch off the computer when the market gets on top of you, and do something else, perhaps concentrate on your business or something.

Failing that isn't ADVFN a better place for such language and BB abuse?

I am pleased to see RED is going up, so far up 0.025p so a steady climber, which in view the level of cash component, increase in gross profit "up 40.3% on same period last year to 9.389 million. Gross profit now represents 25.5% of revenues, up from 16.6%, and also up from 23.0% in the 6 months to 31 March 2002." may well indicate that Microcaps are potentially a safe haven in times where major stocks are going through forced selling via the pension funds, combined with major cap shorting activities of hedge funds.

Redstone looks to be very good comparative value in the Telecoms sector on a market capitalisation versus turnover basis, on a cash versus market cap basis, on the low level of gearing versus market cap and turnover.

One of the pleasant things about investing in recovery plays that have fallen so far, is the risk reward ratio so clearly in the favour of investors, especially when the trend of the chart over the last four months has started a recovery, and it appears the company is improving margins by such large percentages.

I am happy, are you?

Cheers

Ash

DCB,

RED starting to go up I can not believe it!

Cheers

Ash (;-o

Yes. It is up 0.005p. So that's you off to the Bahamas now, is it?

I'm new around here but I'm sick and tired of other BBs where people just bitch and moan and was hoping that this one might be different...can I suggest personal disagreements are put in another thread?

I'm very interested to hear any discussion of Redstone - particularly interested to hear views on why long term large holder Mountcashel (now Abingdon Capital) recently demerged their Redstone holding...

Haystack,

Yep flight already booked (;-o

Pinball,

I assumed they just wanted to demerge all their interests in various investments to take them off their books and separate one from another by passing out directly to their shareholders direct holdings in RED and BIONEX.

Cheers

Ash

Ash

Well that's exactly what they did - just seems to me that if they thought RED were (still) such a great investment they'd have held on to them....

Of course Abingdon's credibility counts for very little these days as they presided over a share fall in their own investment company from over 10 to under 10p.