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.

meanwhile, the company is not producing profits!

how perceptive you are!
5 stars to you!

the technology is only being tested, it may or may not be any good, ask yourself why such a hot american tech company could be taken over by the original investments group from the uk, the recently sacked ceo was from cisco so what happened there then?, nobody understand the science esp the share holders who blindly follow what is told to them by people like michael walters, if their product is so good why do they need 4 million just to market it, i fail to see how 10p can be a bargain price for a company with an unproved technolgy losing money by the day with a market cap of 50,m they need to generate a lot of profit just to justify 10p a share and profits look years away, it may well be 40p one day but more likely 7p before that.

yeah baby, then short away, the aptly vamed yukio!
nice try......try telling that to Cisco, Boeing and the US dept of defense, LOL!

i shorted it from 15p and closed the position at 11p, nice 30%, the only reason i closed is i didnt want to be too greedy, do you really think a company with a fantastic technology based in california would have to wait to be taken over by a british investment company, i know you must be very angry right now because of your plummeting investment but there is no need to post racist remarks as regards my japanese ancestry, we will see soon if this company is for real or just another 3dm worldwide, oxonica, nxt, and the thousands of others that have promised a lot but failed to deliver, and most of them had ties with big companies like cisco and boeing, i suggest you phone up mr shah and ask him what he thinks about vialogy.

yukio ..... quite right not to get greedy .... whether or not your prognosis is correct remains to be seen, but clearly you are not that certain yourself or you would have stayed short, especially in today's markets

yukio
yes, really angry, bought in between 2p and 4p, so my investment has done very nicely this year!!!
far better than the measly few bob you made on your lousy short!
time for you to pick up some crumbs elsewhere!

hush children! .... stop squabbling about the ownership of the ball ..... much more interesting is whether or not VIY really has the biz to or the biz, and can it even make a profit .... as far as i can determine, the jury is out on both counts

for the uninitiated its called a development company moving into the commercialisation phase
you want profits and divis you are looking in the wrong place!
try RBS

notlob
sell now before it goes back down to 4p and you lose all your gains, you are already down 40% in the last few weeks, millions of 8p shares waiting to be sold , you have not answered my question, why did it take an english investment company to take over viy if its such a good company, im sure there are many such investment companies in california seems they didnt pay viy the slightest attention, i wonder why .

sounding desperate, yukio?!
need to try harder if thats your pathetic best!
what a loser-didn't get any pocket money this week, eh?

shut up the pair of you .... it's bad enough having to avoid 10B without having to take yet more evasive action

notlob
i made enough out of shorting viy to buy another apartment in osaka, i know far more about viy its technology, original investemts, jim slater, michael walters, shah talukdar etc etc than your nano sized brain could ever know, your down 40% in the last few weeks so i think its you who is the loser mr bolton spelt backwards.

yukio .... no one gives a toss how much you made, not that anyone believes you anyway ..... however, what we all care about on this BB is the few idiots, and notlob is little better, who are incapable of debating without descending to personal abuse .... it is not only totally pathetic, but it also takes up unwarranted space and with luck Ian will show you (both) a yellow card

cynic

you seem like a decent chap who actually thinks about a share and therefore I apologise if you feel my fairly tame remarks re yukio count as 'personal abuse'
Obviously you have not been on these sort of boards for too long, I take it?!!

I am happy to debate the pros and cons of this share but when you get some idiot on here intent on showing us his medals with his 'shorting achievements', then it is hard to take such folks seriously.

I have been invested in Vialogy (initially via BIP then OIP) for some five years now
I am a serious long term investor and the fact that the shares have gone up or down a few pence makes no difference to my investment stance.
It is the underlying story that I am more interested in, and I believe that story has grown and continues to grow significantly.

I invest in early stage tech co's, with some success.
Unlike others, I understand that this type of investing is not about what profit they have made last year, as early stage co's rarely make a profit.
Some ludicrous suggestions have been made to me over the years as to how to value these companies, yes, lets rate them on a p/e of 10 on their first full year of profits type of idea. Clearly these people have not a clue what they are talking about and are ill-suited to this type of investment, or otherwise they have a spread-bet short running for 10 a point and a trying to make enough to afford a Friday night out.

wrong on both counts .... i have been on this BB for about 18 months, and i don't think even my mother would describe me as a decent chap - lol!

What a pair of cocks!

Question is: Which one is biggest?

FPMSL

obviously deficient in that department, Paulo
never-mind!
LOL!

Only time will tell , wait 3 months and you could be rewarded .