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.

thank you ... that was all that was asked in the first place ..... please note and learn from the lack of abuse in my responses ...... i don't know who wrote the article, but he already has a self-admitted interest .... i don't agree that it was merely indigestion and general malaise that gave the shares a beating, but more "the desperate need for a quantifiable contract to start putting the first financial flesh on a hugely exciting bone structure"

the big Q is how long it will take VIY to genuinely deliver (let's take it as read that they will do at some point in the future) ...... VIY's management needs to learn that to restore and maintain confidence the city needs and deserves regular news + a timetable to which it adheres .... VIY's current belief in the "mushroom principle" does not endear the company

NMS is a paltry to joke-worthy 15000 shares = <£1000

looking good today.

Good morning Notlob - it does seem to be waking up at last and I'm back in.

Good morning Toya
going nicely, I believe great things are planned for VIY!

(OT, you into CRA at all? rhps just released their latest marketing blurb, it sounds a little like CRA, BRR doubled when they did the same to them! Blurb slightly OTT, but what the hell. Check CRA thread for link)

Bolt-on .... you will be flabbergasted to know that i put a few pennis back in here about 10 days ago .... i figured that at 6.5 the downside was very limited and therefore the balance of risk/reward had tilted favourably ...... mind you, i wish my 1/4 braincell could understand quite what these guys do or at least are attempting!

its notlob, actually, cin-yc!

my flabber is ever so slightly gasted, seeing as you have rubbished the share at every opportunity

oh well, momentum buyers who know jack-sh*t about the stock, sounds a great investment strategy, but good luck to you, nevertheless!

momentum has a great deal to do with how shares will perform in at least the short-term ..... DGO is a classic, being up about 25% in just a day ot two, admittedly on basic good news ..... however, we all know that that alone does not always inspire

'momentum has a great deal to do with how shares will perform in at least the short-term '

already a leading contender for the 'stating the bleeding obvious' awards for 2008'

well done, Cynic, a 100% classic!!!!!!

good sarcasm can be witty; poor is dull!
the real point is that one does not need to understand exactly what it is that a company does, provided the indications (momentum!) are in the right direction .... in fact, i often think that one can get too engrossed in the minutiae of a company and its notional fundamentals, and thus lose track of what the charts and similar are saying ..... TMC was a classic instance, and i thus have only myself to blame for failing to bank a very good profit and am now holding an unpalatable loss

sorry, Cynic, you can keeping digging, but its 1-0 to notlob

It was an absolute beauty......keep 'em coming, and don't give up the day job!

oh well, if you want to regard posts as scoring goals, that's up to you ..... must be a soccer analogy there somewhere

Maybe of some interest.


http://www.worldwidebb.com/news.php?id=latestnews&cast=392

good strength here, volume not too bad as well
looks set to go a lot higher, imo.

Why ...no news?

moving againt the market trend, very positive, imo.

what? ... not following trend and momentum patterns are you?..... surely not! .... lol

not, not in the least, never have been a momentum player, but, if I was, least I wouldn't say something as dopey as momentum has a great deal to do with how shares perform in the short term. So I would button it, if I was you!!!

I can see I will have to speak ever so s l o w l y as clearly you are not the sharpest tool in the box.

It is well recognised that a share that moves strongly against the prevailing trend may well have something going for it , and that is what I am suggesting here with Vialogy.

Surprised you've not taken your 40 profit by now, Cynic, and moved onto your next target.

life is full of surprises of which you are not one

life is also full of boring old farts of which you clearly are one!

Anyone got any clues as to what is driving this at the moment, possible deal imminent ?

BTW, I have a substantial holding in this but at an ave price of 11p, will it get back there and beyond ?