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 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!

We are still in the dark as to the sales potential. When they announce contracts then and only then will sharehoders be able to evaluate the worth of their investment.

It was certainly sneaky of them to wait until the very end of the week's trading!

I think the (short-term) sales potential is valued by the company as the intangible assets figure - which is 11,649,759. They have been very careful to patent all their technology, so it's all about what figure to put on the intellectual property value - always a point for debate. But with so many different applications I still remain optimistic. (Only time will tell if that proves to be well-founded). No doubt, though, the shares will dip!

Have a good weekend all!

sod the asset value .... it's sales and profits that are ultimately the only important thing

Sales can be artificially created, so can profits (e.g inflate stock values). What really matters is cash flow - lack of that is what kills businesses (ask Northern Rock, whose sales and profits looked OK at first glance). Buy into any business with recurring cash outflows at your peril!

What concerns me about the results are that in many other companies, there is always a "Forward looking" statement but this one didn't have one or else I missed it. Any thoughts on why that would be, surely to keep the interest the company would have give indication for the next 6 months. I am a holder of this stock but any advice would be apprecaited.

The previous RNS says it all:

ViaLogy PLC
24 September 2007

24th September 2007
Embargoed until: 0800hrs


ViaLogy appoints Dr. Robert Dean as CEO



ViaLogy PLC (VIY), the AIM-quoted technology company that is the leading
innovator of network-centric, real time signal processing platforms for sensor
applications, today announces the appointment of Dr. Robert W Dean as President
and Chief Executive Officer (CEO) of ViaLogy LLC, its wholly-owned American
subsidiary company based in Pasadena, California. Dr. Dean, who has served as a
non-executive director on the ViaLogy PLC board since it joined AIM last year,
will become an executive director on the main board.


Dr. Dean moves to ViaLogy from the Science Applications International
Corporation (SAIC), a global systems and technical services company where he was
Senior Vice President, Corporate Market Development. Previously he has held
senior management and board positions, concentrating on business development and
strategic planning, with such international organisations as Boeing, Lockheed
Martin, United Space Alliance, MacDonald Dettwiler, Electro Optic Systems, the
Rand Corporation and the Ball Corporation.


During the President Reagan's term Dr. Dean served as Special Assistant to the
President and was Senior Director of the National Security Council. He was also
the senior White House executive responsible for high technology issues. During
his distinguished career he has held senior positions with the Central
Intelligence Agency and the US Department of State. He has received numerous
awards for public service including the Grand Service Cross of the Federal
Republic of Germany, which is the highest civilian honour awarded to a foreign
citizen.


'We are delighted that Bob Dean has agreed to accept the most senior management
position with ViaLogy,' said executive chairman, Terry Bond. 'He has the
experience and vision that makes him the ideal person to lead us at this
exciting time in the company's development. Our technology has now been
validated for a number of important industrial applications. Next month,
October, we will be announcing and demonstrating ViaLogy's commercial products
for defence, oil and gas and enterprise management and business continuity
applications.'


Said Dr. Dean: 'During the time I have served as a non-executive director of
ViaLogy I have been very impressed by the potential of the company's technology
and products and the abilities of its staff. I look forward to growing the sales
and marketing organisation and deploying ViaLogy products for partners and
customers in the US and globally.


'I am confident that ViaLogy will achieve the success in the market place that
its unique technology deserves.'

Sometime in the next month we will see the launch of their new products , cannot see any point in selling . A good time to get in before the sp goes north .

brave man who bets sp is heading sharply north any time soon

Cynic , golf has come to an end , so need to make some on the old stock market !

your season finishes early ..... my continues pretty much throughout the winter .... am ashamed to say that i have just crept up to 14 and hate hate hate it ..... intend to get to work over the winter on what i hope is a better and more repeatable swing in an attempt to eliminate the occasional suicide shot ...... at least my short game is now very acceptable for someone of my level of ineptitude, so teaching technique + practice do pay off!

One big comp left in spain in nov , may have to set sell orders for viy at 25p .

25p by nov will do nicely!

better hope that that does not read 2.5p

01/10/2007 00:00 Broker Recommendation


Reiteration of ViaLogy by Seymour Pierce to "outperform".
Seymour Pierce have given ViaLogy a recommendation of "outperform".


They also claim that VIY will have 7m cash in the bank by the end of THIS year, which suggests we're already cashflow positive.