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.

That all depends what price you bought at ?

too much, but that is academic, though one rarely buys at the bottom and sells at the top ..... indeed, usually the reverse

i came to the conclusion that VIY (and GOO and CRDA and a couple of others) were going nowhere good in the near future, and that money in the bank, even if depleted, was the prudent move

Its looking like a steal at 5p

It certainly does Fliper. However, I've got over my Remorse of yesterday, having freed up some cash and now making a profit on BLNX and VYKE with the proceeds. Will review when I come to sell either of those - though I know Cynic will cringe when he sees me say so! (but then it will give him a chance to unleash some of his lashing tongue, which I think is what he needs)

i need or you need??

What's a pronoun between friends.

Was thinking about buying more at 5.2p but mr Y prediction of 3p go the better of me , so sat back and watched it go to 7p .

I know the feeling. But just remember: nothing (ever?) goes up in a straight line, so there might be a drop back when you can top up below 7p.

Did one of the directors say there will be news before xmas ?

did one of the directors predict when the company might start being profitable? ..... is the Pope a Jew?

Hopefully before you shoot under par on 18 holes !

In the RNS following the AGM, was this:

"The Board also disclosed that a pilot project has been initiated with a large
broadband supplier to demonstrate ViaLogy's capability to assist in the
provision of managed services in the areas of 'remote monitoring', 'physical
security and access control', and 'asset tracking'. An update on this project
will be provided in due course."

I can't say that anyone made a definitive statement that there would be news on this before the year end, but a number of us felt that, from what was said, follow-up news on this would be within that timescale.

However, I should add that the directors have found that some of the timescales are proving to be longer than anticipated - so this could be the same.

It's all rather vague, I know, and that's why I (finally!) decided to sell but to keep an eye out for news and sp movements.

consistently shooting within 10 shots of my age before i shoot myself will suffice!

Cynic , I did not know you were 90 !

i may have to pretend to be to beat the target! ..... do you play with PTH at all (golf!)?

Since my post of 22nd Nov, the sp has been up over 7p and is now on the way down, like everything else. If I were going to practise my observation I would now be looking for a sudden 0.75p drop from here to below 5.5p to buy in.

It has remained on my watchlist!

Senior appointment made, price could rise a tad as VIY progresses towards next stage of company development.

The appointment in itself shouldn't add too much value to the company yet, as this will accrue through proven sales and growth.

Should certainly help to clinch some deals next year. VIY now have a very experienced team of people in the key positions so: keep watching!

VIALOGY PLC

APPOINTS HEAD OF SALES & MARKETING


London, November 30, 2007 -- ViaLogy PLC (AIM: VIY), a leading innovator of
network-centric, real time signal processing platforms for sensor applications,
today announced the appointment of Mr. Robert Kern as Vice President, Sales and
Marketing for its wholly-owned American subsidiary company, ViaLogy LLC
('ViaLogy'), of Pasadena, California.


This senior appointment reflects the transition of the Company's activities from
research and development to the commercialisation of its products. Investment
is being made to establish and develop a strong sales and marketing team to
support the roll-out of ViaLogy's products, initially SPMTM - Sensor Policy
Manager, MicroSPMTM and MPEX Electronic EyeTM.


Bob Kern joins ViaLogy from the Science Applications International Corporation
(SAIC), a global systems integrator and technical services company, where he was
the Vice President and UK Strategic Account Manager. Previously, he had senior
business development responsibility for SAIC's Defense Intelligence and Security
business and also ran an SAIC business in Europe with several hundred employees
in seven countries. Mr. Kern has also held senior sales and marketing positions
with Silicon Graphics, Sun Microsystems, and Autometric in the intelligence and
security business, serving both commercial and government markets. During a
distinguished career as a US Air Force Officer, he led efforts to develop field
intelligence and integrated security systems and architectures for battlespace
management.


Commenting on his new position, Bob Kern said:

'I am very excited by ViaLogy's potential, its technology and value proposition.
I look forward to developing our sales channels and partnerships with system
integrators to incorporate our sensor policy management software and hardware
products, which are designed for safety, integrated security, surveillance and
business continuity applications.'


ViaLogy's CEO, Robert W. Dean, welcomed Bob Kern as the company's newest senior
executive, saying:


'Bob brings to ViaLogy a deep understanding of our customer and market base, and
an on-the-ground appreciation of how ViaLogy's unique technologies will play in
future government and commercial integrated security solutions.


'Today, in cooperation with a number of global blue-chip companies we are
supporting multiple sensor integration field trials. Bob's international
experience will be key in driving our sales growth.'