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.

actually mid VIY close yesterday was 9.25p

CRA 48.5

-the closing prices of yukkys tips yesterday was

BVC 31.25
OXB 36
AZM 80
BLZ 67.25

A most interesting selection of tips, my friend Yukky
I have owned all of them in the past
BVC especially bring a warm feeling back to me (and no, I have not just peed my pants, before you ask!)
I think it was a 50 bagger for me, I did something rare, I bought at the bottom and sold at the top for a change.

Anyway, best of luck with your tips, I can see you like the high risk end of the spectrum, therefore that is yet another thing we have in common

your trading pal

Nobbbbbyeeeeee

Notlob et al: please note that OXB is on the up - see notes on the OXB thread.

So that's one point to Yukky at least!

well done to yukky, then

although, please note, as I originally stated, my time-frame is longer than 12 hours!!!!

I know in this day and age that to hold for a month is a long term hold for most folks, but long term is the way I play it.

Notlob: I do agree with you. I hold some shares with a long-term view (VIY is one, and I've bought back into OXB again recently, having done well with it earlier in the year over several months). But it's also quite fun to take the occasional short-term 'punt'.

OXB will now continue to go up, I'm pretty sure of that, because of the various drug candidates in late-stage development - all of which is of great interest to the big pharmacos.

toya
yes, not adverse to a short term gain myself!
and our friend Y has picked some interesting ones, no doubt at all.
I'm willing 'em all on(ie inc CRA + VIY + Y's picks), then we can all be winners!

nobs

i rember buying bvc for 186p and selling at 6842p 18 months later, before the days of the 10-1 split , did well out of blz also, both back in 1998-2000, when madness had taken over , blz and bvc are looking a better buy now than for years, oxb i have been trading in and out of for 8 years, its a yoyo, perfect for trading but now i think its a long, azm i only recently purchased for the first time, looking to sell it at about 120p.

Yukio - well done on the trades you've noted above. I've traded AZM a few times over the past year and done well with it. They also have some late-stage drug candidates (like OXB) and could be a takeover target, but it's another yoyo - good luck!

Nobs: CRA does look very interesting and I may well buy some for the longer term when I can release funds elsewhere (definitely not sacrificing my VIY!).

This could be a big week for VIY .

Fliper: have you read anything in particular to make you think so? - or do you just hope so?

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.'
Not many days left in October .

agm oct 30th---anyone going? that's when everyone is expecting good news.

Thanks Fliper + Moneyplus. I didn't see a note re the AGM here on moneyam but have just checked the Vialogy website having read the above.

I think this is one AGM that I would very much like to attend - must book a train ticket! Should be interesting. Anyone else planning to go?

I might try to get there.

Morning Notlob et al: VIY not looking so good today!

morning Toya
not the best of starts, but the MM's do like to run this one up and down
I remain confident, though, and feel we should have decent news over the balance of this year, imo.

no news and stock has gone dull ..... prob peeps just taking money off the table (as i did yesterday) against the strong(ish) likelihood that the markets are starting their overdue correction from an o'bought position.

The MM will have this up and down before the AGM , after that we are going north .

While we're waiting for news here--anyone here into GNG? another great contract win announced today--check out all the recent announcements.

Level 2 is all blue again now - guess you're right, Fliper: it will be sliding about until the AGM. I'm sticking with it anyway.

Sometimes the MM move the sp up and down to pick up shares because they have a big buy order to fill . Sit tight every one , not long to wait .