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.

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.

Great news Paulo2. Let's hope our infinite patience will be rewarded before we all expire!

is a full transcript of SP's note available as it will be interesting to see, inter alia, where they reckon this extra cash is coming from.

Selling now is like ripping up a betting slip well you horse is under starters orders >

Couldn't have put it more clearly than that - thanks Fliper

you can argue a case for this being fair value at 4p, but 8p is way overvalued thats why its heading for 6p soon, i doubt you will see much in the way of sales for another 18 months, this has as much chance of going up much soon as my grandfather had of getting off iwo jima alive.

Not a very good analogy really, 'cos none of us know who he was, what service he was in or if he in fact got off!!!

or got off with whom even!

poor old yukky, but good news for his grandfather.....looks like he did get off iwo jima afrer all!

VIY going up nicely

no doubt yukky will be along to give us his pearls of wisdom
I do hope he put some money on his views-or perhaps he doesn't hold his views that strongly?
consistently wrong to date, not a bad track record
be interested in any more 'gems' from Yukky, so I can bet the other way!
LOL!!!!

over to you, my friend yukky, take the floor!!!

Yukky says they will have no sales for 18 months ! , VIY are saying , We are anticipating worldwide demand for the products ,
I wonder who will be right !

My money's on VIY!

well, they already have some sales, going by the last report!
looks like yukky got it wrong again-oh dear, time to douse those on fire shorts of his again, assumimg he has got the balls to short the thing in the first place!

Come on yukky, don't be shy, whats your short position on VIY?

im not shorting this, but i did predict the fall from 13p-8p, this current rise is nothing unexpected, its still on course for 6p, nothing goes down in a straight line

great stuff, yukky
you predicted a fall but didn't put any money on it!!!!
one wonders, therefore , why you post here.....ir could it be you are telling a few porkies!

anyway, please give us some more of your star tips, long or short, as you seem to have the midas touch in reverse

your pal
Nobby

notlob your funny guy, it goes from 15p to 7p and then up a few pence and you think its some kind of huge rise, this may be 50p one day but it will be 6P first
BANZAI