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.

but not if they don't .... lol!

Beats me why you'd want to bring on a 69 year old guy. Lot to be said for experience I suppose.

he needs to top up his pension

Vialogy recently announced that their first commercial product would be launched sometime later this year . They descibed the product as "providing network-centric real-time intelligent processing systems platforms for sensor applications",
Does anboody know how to translate this jargon and what it is worth in real terms?

Hope we are not being taken for a ride.

the example I have in my mind is in border controls--ie an illegal crosses the border covered by the systems and is pinpointed immediately. this is I believe already in trials on 28 miles of the US border. They can also pick up hidden explosives on people or road side bombs etc. don't ask me to explain how but I could think of a thousand uses for the technology--we just need the first wave of [ autumn]contracts!

I have a feeling about this one , I will stick my neck out and say the shares will be around 40-50p at the end of the year .

nice feeling,fliper
settle for that!

network-centric: all parties joined up, linked up, connected up for comms/info or data pictures.

real-time: current, upto date, as-is, happening now

intelligent processing systems: state of art computation and analysis

platforms: vehicles; tanks; aircraft; ships; submarines etc

sensor: radar, electronic warfare equipment, sonar systems, passive listening or sensor devices etc


Value: if it works then oodles of s
Significant applications in the security and military environments which if work should give those fighting Al Quaeda et al a significant edge.. Can't be done fast enough!

I think big orders will come in and the sp will shoot up .

nice!

Directorate changes, how does this affect the shape of the company and their technological breakthroughs. What position did Mr Shah Talukder hold and how important was he to the companies success.

Arrived from Cisco April 18th 2007 - so I doubt much impact on technological breakthroughs - however very rapid departure. Hope its just an over reaction / buying op.

Thanks Gavin bought 50,000 at 10p and within 5 minutes covered the spread, nice eh.

Suggest you re-visit the RNS issued in April when Mr Shah Talukder was appointed as an executive director but also President and CEO of the US company where all the action is going on. This sudden departure is not good news as he moved across from Cisco which at one stage was thought to be interested in buying Vialogy.

A good chance to pick up some cheap shares .

bad news , maybe the cisco guy realised the technology was not what it was cracked up to be , this stock is only worth 2p on fundamentals all the rest is just hype that might or might not become viable, it needs very good news soon just to justify its 10p a share value, very good news soon or this will be back to 4p i think.

looks like it heading for 8p short term, then if the results are poor even lower.

Join the que to buy at this price ! when their products start selling the sp will fly .

that could be a long way off, with its current market cap it needs to make a lot of profit just too justify 10p a share, dow down 360 tonight i can only see viy going lower, this could be another nxt, 3dmworldwide, oxonica etc etc, a lot to prove and a very risky share to hold, i would not buy unless it dropped to about 6p and even then its a big gamble.

Bargain hunting time,these will be blue tomorrow.