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.

At least the discounted price will attract only serious investors as VIY are moving from research to 'serious' Business focus.

SERIOUS INVESTORS????

YES POSSIBLY BUT A WHAT PRICE?

If I agreed to invest money at a certain price- when the time came to announce it and all the agreements drawn up---I would probably pull out if the company came back and said whoops the sp is higher now so the price has gone up for your investment. where's the integrity and business ethics in that? their reputation would be ruined in the investment world. I'm sure the next set of results will reveal all and keep the small holders happy!!

mmmmmmmmmmmhhhhh interesting point of view, but what about those who just bought a say 10p when they could have bought at 8p?

Lets face it some have been well and truly shafted.

cynic I'm certainly with you on investment style. -- especially on this co -- can anyone really understand what this co is all about?

Here as you seem to say why 8p -- are these guys really that greedy -- i.e. they see the share price going to say 50p but want a 30%+ discount to the share price just to get in. Personally I think these guys are probably that greedy. They want to feel that they're superstars so an immediate profit boosts their egos. Therein lies the problem - don't need to know what the management had for breakfast when you can tell immediately from this placing that they probably haven't got a grandmother left to sell between them.

Still they are putting more of their money in -- sure to make themselves bigger and brasher --- but think of the damage to their egos if this one goes belly up Almost worth losing my own money just for the laugh

VIY has done rather well for me - entry point low - so i see it from a different angle than you Cynic.

But the key is that entry point should have no bearings on our "feelings" for a stock. In which case i can't see how the positve angle that i was looking at has been materially changed by the greed of the "associates" of this company. Blue sky still intact just slightly watered down esp short term

General opinion is that the results have been moved to August for a reason hopefully some contracts etc. If they say they are ready to commercialise 3 separate technologies with probable global demand from oil/gas ---defence--and security/border control it sounds like blue sky to me too!! Jim Slater, Cisco and Boeing are all behind this one---so am I and aug is not long to wait and see!

thanks 10B .... have never been afraid to stick my head over the parapet and take whatever flak comes my way, and even occasionally say, "Told you so!"

would i ever venture back into VIY? ...... not inconceivable, but i would be monitoring very carefully befoe doing so

by the way, i see PMO has jumped about 45p on renewed t/o talk ..... PMO is surely a prime target in second line oilies and/or will make a good strike comme TLW

The low placing price is not surprising, IMHO. Bear in mind that the company has no revenue and has enjoyed a strong run-up in the SP on news of forthcoming business. That leaves a lot of scope for the share price to be very volatile, and you aren't going to get fund managers to buy into a placing on the promise of them booking a 25% loss at the time of their next monthly NAV.


Much as we'd like to think that VIY is going to make millionaires of us all, you also have to remember that a lot can and does go wrong with small-caps, no matter how prestigious their clients (I feel a strange urge to mention SEO, but won't, in case I offend somebody), and it is this risk that is being mitigated by the low placing price.

sensible comment soul* but then i would expect no less from you (hahaha!)

I have my moments :o)

I WOULD ADD A DITTO TO THAT

I think these will come good later in the year when their sales start up . Hold

Interesting and lengthy write up on VIY by Lemming Investor on the Proactive Investors web site - free to access: It also includes a TA view, suggesting a buy opportunity. Good luck to all holders. DYOR :-)

www.proactiveinvestors.co.uk/

Lemming investor...

he was the one, OR one of then that ramped WGGS WHILE THEY WERE FIDDLING THE BOOKS AND THE SAMLL SHAREHOLDER AT THE SAME TIME.

No tipster gets it right 100% of the time.

This was not a question of getting right this was delibrate fraud!

If the posts are still on ADVFN TAKE A LOOK!

This is one reason the PI need to be protected. Leeds lad posts here ask him

Just spotted this one and read through the whole thread.
Appears to have a good future, price down because of recent flotation.
Question is, why low does everyone think it may go, and when, for my first venture into this one.

perhaps not a bad long term investment, i don't think you need to rush to buy ...... 8 may be a good value entry point

When the sales side of viy start and the orders come rolling in , the sp will shoot up . Dont leave it to long .

Buyers coming back again , they can see the long term potential in these .