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.

nice, flipper

moving ahead in weak markets is always a good sign, on decent volume too.

wheres yukky when you need him! Probably dousing his shorts! LOL!

dow down 280 , now the real crash is starting 4p soon.

LOL!

See what you mean, yukio.

LOL

quick, send for the fire brigade, looks like yukkys shorts are on fire!
LOL! This guy is good!!!!

Well fliper, you have got your 10p to sell, just seen it ;0). Oh what a shame I wanted the 4p so I could have filled my boots, lol.

Make that 10.25p to sell ;0))

Well I got more at 7p thanks to mr Y talking down the sp . We will see the sp fly in the next 4 months .

nice close, looks set to go a lot higher
could do with one more top up- but yukky's magic don't seem to be working anymore!
shame! LOL!

the mm's always give people a last chance exit with a spike up before the next big fall, thats what this is, we will see who is right within the next 6 weeks, i cant wait your all gonna look so dumb.

LOL!
if you want dumb try looking in the mirror!

Dow closed +250 tonight
tomorrow could be sweet......whose the dumb ass now!!!!

Any ideas of why the big jump today expecially in the current market ? Possible rns by end of the week ?

Current holder & hoping for the SP to continue north

your the dumbass notlob for not selling at 15p, this is your last chance before the drop to 4p, market makers pushing this up before an expected rns, if its not whats expected the mm's and short term traders will drop this like a hot coal, look at the chart its still on a downtrend the latest spike just confirms it, a mirror image of its rise, just as many selling as buying, the dow is doing what it usually does before a crash , its volotile both ways, get out now while you can folks.

No.

Keep trying, yukky
you are sounding quite desperate now-poor chap.
those shorts feeling a little hot?!!!
LOL!

Prepare for an awesome autumn
Ken Fisher
29.08.07

Those blinded by the summer correction into believing bad times and a bear market are ahead will miss this autumn's rally. Don't be among them. The correction could last a bit longer - and many do a W-like-bottom, bringing a whole additional roller-coaster ride before the rally. But there is a good up-move coming.

How do I know? First, corrections start with a bang, bears with a whimper. Corrections are short, sharp shocks, fuelled by a fantastic, scary story later deemed inconsequential or even silly - or maybe a disaster that later seems to have been miraculously and barely averted. That's a lot like now, with disaster seemingly springing from a subprime mortgage-induced credit crunch. Sometimes there is one such story, and another a month or two later - equally as scary. Think 1998, for example. First, the Russian rouble crisis followed by the supposed Long-Term Capital Markets crisis. But three months later, the S&P 500 ended 1998 up 28.6%, all of it in the last quarter of the year, after the correction faded. Conversely, bull markets have slow, broad, rolling tops, churning in a narrow bandwidth - within 8% or so from the top - for the first six to eight months of the new bear's duration (1987 being the sole exception proving the rule - it came and went too fast to time), marked by effusive euphoria. In 2000, non-tech US stocks were actually positive for the year, and the FTSE 100 was only down 8% - the slow broad roll of a market top. No euphoria plus a sharp drop, like this summer, equals classic correction.

But how can the credit crunch be inconsequential? Easy - it's a phoney crunch! In my last column, I told you to watch the spreads. The media preaches spreads are wide, but they've got it very wrong. Sure, spreads are wider than June, but only 1.4% from historic lows. (Real credit crisis spread magnitude is maybe three times that) At worst, spreads are "normal" right now. We saw a similar magnitude mini-spike in 2005 coinciding with 2005's market pullback. No one screamed bloody credit murder. Then, a no-show bird flu pandemic was supposed to mangle the market. It didn't happen! Since July, spreads have actually narrowed a bit. They've narrowed despite long-term government rates dropping globally. Legitimate credit crunches usually see treasuries and gilts rising, not dropping. Had long rates stayed put, we'd see much narrower spreads today. Medium grade long-term corporate rates and mortgage rates are actually lower than in June. By definition, cheaper borrowing rates are pretty much the opposite of a credit crunch.

Don't be fooled

Something else real credit crunches don't have - vast amounts of cash on the sidelines. You can see the cash in the recent down-spike in three-month US Treasury bill rates. Normally, T-bills trade just below America's Fed funds rate. (The rate can't be higher or banks would borrow Fed funds endlessly, buy T-bills, and profit on the spread.) Sometimes there's spread volatility, but big spreads, in excess of 1.25%, are rare. When it happens, normally it's because America's central bank raises short-term rates. If temporary, it doesn't mean much. But if the central bank's tightening, and the spread's wide for a longer period, that can be (but doesn't have to be) bearish. Still, that' s not what's happening this time. The gap got super wide on August 21 - over 2.25%! - because T-bills were falling with the Fed funds rate flat. It takes a tidal wave of cash buying bills to move the spread so far so fast. This is not bear market action. This is panic and classic correction bottoming. I can find this in history in corrections and bear market bottoms, but not a single occurrence of it happening early on in a bear market. Not one. Why is this so bullish? That cash won't sit in low-yielding T-bills for long. As it pours back into shares, the ride will be awesome.

One final way to know the fall rally's on the way? Those dour journalists! The media will often make general, Johnny-on-the-Spot decrying corrections - quick to accuse, try, and condemn their scapegoat (subprime today, yen carry trade earlier this year and last, bird flu in 2005, Russian rouble in 1998). But when bull markets peak, they're silent on true economic negatives - too busy filing euphoric stories about new economies and new paradigms. Don't be subprime-blinded and media-mauled and miss the rally.

Ken Fisher is chairman of Fisher Wealth Management and a long standing Forbes Magazine columnist.

forget all that rubbish notlob , the crash is only just starting, you will be lucky to see 15p again for a few years, if ever.

LOL!

I think it will not be long before a RNS is out , The launch of its new products and soon after that , RNS with orders .