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.

coiled spring--I hope!

Tks notlob very interesting article. All we need now is some large contracts with the US Goverment and the shares will take off.

Thanks Notlob. It's risky, but so are a lot of investments. "... possibilities for the technology are seemingly endless" - and we only need one tangible contract to get things moving; so I'm keeping faith with this one. CISCO have bought into one of their products, and I take that as a positive - see link below:

http://www.vialogy.com/index.php?page=spm-cisco

Good luck!

sp moving up , last chance to buy below 10p .

last chance to sell at 9p

great news everyone, yukky is back, move north now is almost certain!
missed yer, yukky, where yer been, mate
bought those new shorts yet?
LOL!!!!

When is VIY going to report? Nearly overdue.

if after hours today, you can guarantee they will not make good reading

2 million quid loss, no new contracts same old jam tomorrow rubbish, shares plunging now

"shares plunging now"......... down 3.95% on the day. That constitutes a plunge???
Move the decimal point a couple of places to the right & fair enough, but I've seen FTSE 100 shares move more than that!

Results are 6 months out of date. We need a strong forward looking statement from the CEO.

i like the way they delayed the results untill last 30 mins of trading, obviously hoping to avoid a whole day of selling, trouble is the markets open again on monday lol.

The sales of their new products could see them in profit after 3 months .

3 years you mean

nice one, yukky!
keep saying it and you might convince yourself!
thats a 4% plunge, errr....right, ok.
hey, hang around this time, you are good for business
don't you go running off now, you hear!
LOL!!!!

the figures are appalling on the face of it and categorically there needs to be a strong trading statement if the shares are not to go into freefall as yukio has long predicted.

it would be interesting to learn, inter alia, why their overheads have rocketed exponentially with just a paltry increase in revenues ...... i hope, though fear the worst, that the directors current and past have not been dipping deep into the till .... as was the case at EXP

try reading the accounts + using yer brain, cynic
I thought you were one of the brighter ones on here? oh well
Here is a starter for you.....900K D+A costs and merger expenses, your starter for 10
LOL!!!!

did not see the accounts, not that i can read them anyway! ...... only picked up the AFX announcement on NewsWatch here ......

but having now read the accompanying blurb (figures are gibberish to me) it is certainly rather better than i feared

on reflection, sorry for my tone, cynic
also, re admin costs, it is not like for like
the previous year, admin costs related to Original investments, ie 2 mean and a dog sort of operation
this year, there are 30 phd employees to feed and water!

don't apologise .... sign of weakness - lol!