Some good news at last from this weeks Shares mag. Tim Freeborn revisits the company and altho no firm details are given about new deals he says they will be announced this quarter. I would think that this could be at the same time as the interim results are announced. I for one will be holding on cos they will fly sooner rather than later! ( 8.30% up today!)

Tradx - 13 Sep'04 - 09:59 - 518 of 519

Excellent post, you appear to know what you're talking about, much better than RC and some of his mates.

jw


yes, i was shocked to get a reply.

Tradx

Thanks for the note which is helpful and demonstrates the problems of making sense of the company. If I wasn't already in, I suspect I would be watching from a distance waiting for positive news before committing myself. However, I am continuing to hold looking hard for the green shoots of spring (hopefully this Autumn!). Several points which summarise my attitude and address the issues discussed:
1. The share in the Hong Kong based consortium is 'an initial 28.5%' (interim results, source as yours). Don't know why 'initial' (I accept your point that most statements invite further questions). Roll out predicted to start in June 2004 but no mention in the recent briefing of progress. I took the 6% take-up to refer to the number of Hong Kong residents who actually use their cards for financial transactions - not unreasonable I would have thought for an innovative service. The implications of the deal remain significant.
2. You mention Seymour Pearce but the advisors are Nabarro Wells. I don't know the latter whereas I would have been more confident with the former. I get the impression that the actual author was a bit out of his depth which would help to explain the delay in issue of the note.
3. Looking at the list of companies on his CV and a 'certain unreliability' in public utterances suggests that RC is unaccustomed to a role in the spotlight. Comes across as a 'poacher turned gamekeeper'. He could well have been appointed because, with Gelande, he had been more successful in selling EPO than their own management. At least, we are not solely in his hands given that he reports to a Board (of which he is now a member).
4. The key point about the 'virtual banking network', I think, is that customers of the EPO client can have transactions with a very large range of banks handled on-line. The parallel is credit card payment systems. Reasonable write-up in Interim Report, updated in briefing note.
5. Quite clearly, the main problem is the slow achievement of deals. The gaming deals have been slow in generating profits and have been hived off, which will at least allow focus on better revenue potential situations. I made the argument in an earlier note that EPO are in the most difficult phase of development for a company based on innovative technologies - the low gradient initial revenue of the economic S-curve.
6. Its a fair point - why have Directors and main investors not been snapping up shares at the current levels? But nor have they been selling either; even a daily volume of 1m shares is only some 13K, so the mm's have moved the price way down in response to a steady trickle of small sales.

There is nothing here that cries out 'buy now!'. But there is nothing that says 'sell now!'. I am holding, even with investment opportunities abounding, because I believe the next move must be upwards; it may be some time, but it could be this week - all it needs is some solid confidence-building news (!). The briefing note spoke of 3 deliveries scheduled for October; perhaps the arrival, or not, of confirmation will contribute to confidence.

Eric

Eric,

by and large I agree, confidence would come flooding back if they could finally announce some solid transparent revenue generating deals that the market could believe in, if they did that, then whatever their history it would be forgiven and forgotten, and the shareprice would probably finally have reason to motor on.

I still don't see how they can hive off the only revenue producing bit (thus far) and allow some other entity to take a stake, but if it raises cash that they need to carry on, then this must make sense. I watch in anticipation!!

regards

T..

It's nice to see that this thread has taken a constructive tone......with balanced observations..........much appreciated.....thanks

Down yet again!

Down to 1.0p. Ridiculous because the fall is on quite small volume - my conclusion is that the fall is a ruse by the mm's to attract some buyers in. Well, they attracted this buyer in at 1.08p. Either a brilliant averaging down exercise or, perish the thought, good money after bad. My vote is for the former, obviously, because there is no volume in the sales. Cap. is down to 5.4M. Price already back up to 1.05p. Why not join the party?
Eric

You are brave, I would like to see some evidence that EPO is not going bust before I touch it again.

I'm not sure about the bravery bit - doesn't deserve the DSO! Its a question of risk assessment. If the selling volumes had been at all substantial, i.e. by institutions and large investors near the company, then you would smell a rat, take your money and run. In fact, the price has been marked down on total sales value of 11K!
Yoomedia provides a good case study in the other direction. A week yesterday, mactavish saw a sudden increase in buying volume and bought around 17p on the basis that indicated positive news. He, canny Scot though he be, is also canny in the Geordie sense (I am a Newcastle United supporter!) and started a bb. The announcement of the interactive broadband DTV initiative came on Monday morning, the price is now 25p and probably going places.
I like the Hemscott quote today : "There are fundamentals, charts and entrails, and when it comes to forecasting the future it is often that feeling in the pit of the stomach that offers the most reliable portents... at such times you should be ready to back your own judgement." I'm glad to see, though, that I was not the only one who saw it as an opportunity.
Eric

I didn't think that there were any institutional shareholders left, I think that the last 1 that was left sold out in June.

Man Financial declared a 5% holding on 9th September. This is brokerage division of Man Group - some queries on this bb but natural conclusion that this was a 'matched principle' initiative to make loads of money. June comment presumably refers to Tallulah Properties who sold about 0.5% taking them below the threshold they need to report. What's that joke about 'turning out the light'? 69/31 ratio of buys to sells; 25% spread - interpretation?

Holding this from 3p. Have put it aside until it either goes bust or ballistic.

boothbym et al.

I've re-read the last trading statement - having shocked myself by switching some money from ASOS, of all firms, earlier today into EPO at 1.08p. Its not a particularly well-constructed document, but on second reading a consistent message does come through. Remember we are dealing with an innovative, high-tec IT company. Surprise, surprise - they have had problems/requirements with their IT systems, covering both facilities and performance. These have delayed roll-out and, where installed, have probably delayed build up in revenues. From the development timescales given, 5 months for ep5, the hiatus in revenue flows should not persist into 2005. This also suggests that the problem with RC is not that he can't communicate with customers and financiers but that he can't communicate with his IT people, who are probably the core skills of the company. How many people can? If this is the key area which has been impacting revenue roll-out, where is the discussion on this topic on this bb?

If my reading is correct, yes, more patience is needed until the final results when a much clearer picture should emerge. More important, then EPO should be back to 3p early in the New Year and perhaps 10p later in the year - that is only a cap. of 54M. It may be that, surprise surprise, Man Finance know what they are doing! Remember, it was said first on bulletin 532 and profit from it!

Eric

Eric,

You have hit the nail on the head..again!

Perhaps, you have shown what the board should be considering now...finding a ceo that understands the product and the sector.

The company has a CEO that doesn't understand IT !! Remind us all what his background is? Is it as a succesful financier? Is it as a highly successful businessman? Is he a great communicator and motivator? Is he a great salesperson? Just exactly what does he bring to the table apart from a pretty hefty bill for a company of this size,at this stage of their development?

The final results will show t/o of 1 mill or less, and losses of 5-6 million or more, imho!. The only way the revenue flows change in 2005 is if they have new customers now!!!

The betting revenues are 'disappointing' and everything else is what?...from whom? when?...The trading statement made some precise 'predictions' what's the betting they are 'delayed' again?

As for MAN, they are beneficial holders, not directly, so nothing can or should be read into their position...I admire your positive interpretation, but I cannot see what it is based on, their track record of disappointment is simply dire.

all imho, dyor and all that BS.

regards

T..

Its my view and i've been banging the drum for quite some time that until CEO is replaced along with some of NED's then we will remain in the wilderness, thats a fact.

Tradx666 mentions CEO career to date, if you can put all the pieces from the career jigsaw puzzle together then that in itself would be a major success.

Forget about the personalities, deal with facts, previous management failed & current management are about to follow. They have certainly misled Shares magazine and in my opinion others as well.

jonny,

I don't know if you noticed but shares mag, have since made their position on epo pretty clear,i.e. any investment here is to be treated as a VC type punt (or words close to that effect).. as for the rest of the stuff about deals done etc, it looks like we will never know..

As for the previous management failing, well at least they admitted it and moved on. As for current management, I have already made the point, the question is what do people deem as 'success' i.e. what are the metrics and expectations, and how long have they been in charge now?

Tradx, Johnny

Your standpoint is understandable. You may be right that the CEO should be fired. The continuity would then be through the Board of Directors. Looking at their profiles in www.earthport.com their credentials seem to be much as you would expect. An emphasis on non-executive posts with a non-executive chairman (is Andy Ripley the ex-england rugby player?). Seems to have good financial and legal representation. Anybody know any of these guys? It is fair to assume that RC, now a Director himself, would put the business plan (basis of the trading statment) to them for approval. RC himself comes across as primarily an entrepreneur although he has a business development background with Wiggins Teape and Midland Bank (at what level?).

I think it would be reasonable to expect that the Board will be well able to assess the financial, marketing and sales aspects of the plan. My concern is,if anything, reinforced that the plan is critically dependent on the ability of the IT and communciations teams to deliver on schedule and to spec., particularly performance. It may be that they have engaged a competent consultant to check this out. My concern would be that, given the cashflow issues, that they are taking the IT plans on trust from line management.

In the end of the day it comes down to risk assessment and we don't really have the facts to do the job. The Board should have and may have. What are their contingency plans? Talking about 'risk', the funds I have invested are risk funds in that it would be annoying rather than disastrous if they went down the pan. Risk has an upside as well as a downside and I repeat my view that they should recover to 3p on delivery of their plans and 10p if they then move round the bend of the S-curve. Evens on the first? 2 to 1 against for the second within my timescales (say 18 months)? I accept you have to be a gambling man!

Eric

EPO stated in trading update that 3 customers go live in october, i took this
to mean contracts already signed.
Are these new customers/deals or are their identities public knowledge?
Just wondering if i've missed something.....

dibbles

I see noone has answered your query from yesterday evening. I certainly have seen no names. The May international client was clearly Wanadoo. Several reasons why no names published: the client does not want publicity; the client is not a 'name'; the delivery is a trial rather than a full system.

I am not aware that thre is necessarily a significant sum payable to earthport on delivery as, I recall, the emphasis is payment by transaction volume. This is why sportingbet, etc., have been disappointing. Also why the IT updates are so important - if there are problems in handling transaction volumes, and functionality is incomplete, then transaction volumes and revenue will be low. The upside is that, once the updates are successfully delivered, there should be an immediate jump in revenue as existing clients increase their volumes.

Price up to 1.20p today on low volume with small sales predominating; wide bid/offer spread still.

Eric

Where has everyone gone? Interesting day. Price steady at 1.20p on 1.34M volume, split 16/84. Spread slightly down - 1.10 to 1.30. Interesting in sense that predominant sales have not moved price down suggesting some resilience. Mind, volumes are very low at 0.25% of equity. No conclusions, just thinking aloud!