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.

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 .

Not to mention the new CEO. See Mike Walters has been bigging it up again.

Should be an interesting September -- especially if you're short. ;-)

Mr Y seems very quiet!

Paulo", can you share or expans on what you mean Mike Walters has been bigging it up again, what has he been saying ?

its after an rns this will plummet, a lot of people bought this over 10p and are just waiting to get their money back, if it goes up after an rns it will be a massive sell off, if it goes down after an rns it will be an even bigger sell off, you should fear that rns not look forward to it, maybe thats why its so long in coming, they know whats going to happen. imo

Surely if those people waiting to take profits do so, the sp will fall & investors will then be tempted back in at a lower price? Same with any stock.

Y .... your post lacks logic and begins to smell somewhat desperate .... though i hold VIY, i do not have any strong view as to whether is will boom or bust, but you sure keep banging on and on and on without any persuasive argument or logic.

however, i would certainly agree (had you said it) that VIY needs to start producing or at least indicating profits in the next set of figures if not sooner if the City is not going to kick them hard

this is a jam tomorrow company, sorry its a maybe jam tomorrow company, its a long way off producing profits, a long way off justifying its huge market cap, if your lucky the markets might calm down and this may hover around the 10p mark over the next 12 months, if your unlucky and the markets decline this will drop to 4p.

Seems like he's changed his tune already.

lots of selling today, looks like that potentially disapointing rns is near.

looks like you have no better hypothesis to put forward ..... what a load of tosh you write sometimes ..... makes my gibberings look almost intelligent

sells outnumber buys by 8-1 today, chart set in a downward pattern to 4p, last chance to get off the bus before it leaves for 4p.

zzzzzzzzzzzzzzzzzzzzzzzzzz!!!!!!!!!!!!!!!!!!!!!!