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Doma...... well
other things have been claimed to be on the cusp of announcement & then the vapor vanished.
some examples:
1) SKS alluded to a big OEM PR around year-end 2003. voids speculated that it was Dell.
2) SKS claimed NSM SafeKeeper chips might be on some boat from Asia around 16 months ago.
3) PJS claimed mind-blowing WaveXcess news was "literally just a few weeks away" (also around 16 months ago).
4) if i were inclined & had the spare time, i could point you to literally dozens of other such proclamations which quietly vaporized...
but, you are correct, maybe one of the things you cited will come to fruition... maybe even someday HP will announce something too (it's only been 6 years(+/-) since the VerSecure days...)
good luck!
Berliner Börse AG volume is not the issue.
you wrote:
"The net result is, the listing doesn't amount to a hill of beans."
it seems you have not been duly diligent or even considered the potential Reg SHO implications of the foreign listing.
http://finance.yahoo.com/q/hp?s=WAVX.BE
http://www.berlinerboerse.de/index.html?LANG=en
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=108...
oh, & btw, people actually purchase & use Tivo... Wave reportedly doesn't even use its own stuff internally, apparently not even as a proof-of-concept, let alone to make its internal computing cooler!
& btw2, 5Par just posted an interesting spraguespeak find from 3 different CCs:
CEO-CC 3-31-03
<<<And to give people some expectation of where that range is, we see that as a $30 to 40 per year business on a per platform basis.>>>
CEO-CC 8-14-03
<<<So the goal is that the 25 to 35 dollar per year per seat model for an end user to have their machine managed.>>>
CEO-CC 5-13-04
<<<We believe that’s a 10 to $20 per seat business, again depending on specific options that are chosen on an annual basis.>>>
http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=19864721&tid=wavx&sid=19...
"...so right mews could definitely get us back to $5."
like what, a 5:1 reverse split?
"...we couldnt be shorted with the (-) tick."
LOL!
Ich bin ein Berliner - JFK
PS CMF - SO, whatever came of McGowan's HWP/Wave VerSecure vision (circa 1998-99)?
also according to SPIN it was a good move to sell the last P&D at > $2.
will be looking for that official HWP announcement.
wasn't it s'posed to be announced last summer?
Auf Wiedersehen!
edit2: hamster - please show me where i have violated the TOU.
if i have, i will apologize for any such transgression/s & learn from my mistakes & avoid future errors.
you are wholly incorrect to characterize my rhetoric as being part of some imagined vendetta. as some might attest, even when i held mid six-figures worth of wavx, i challenged the many apparent lapses in fiduciary duty, seemingly exaggerated &/or misleading "guidance," ostensible self dealing & the like.
today i provided an update on certain aspects of the class action litigation (despite being subject to abusive attack posts) AND i gave you a heeeyoooog clue about something which might be seriously rotten in Denmark.
my posts are about Wave Systems, its mgmt & the trading of its stock, financing, SEC filings & other fundamental matters which are related to this stock. if you don't wanna read what i write - hit the friggin iggy.
good luck w/yer investment decisions!
edit: SSP's revs for the Q = Wave's ALL TIME revs dating back to 1988.
edit2: see hamster? there is no need for that sort of retort. i gave you some serious DD that you can choose to ignore at yer peril all you want. it is as if most wavoids don't even have a clue about what is going on w/their investments behind the scenes. it's always about how they already "know the outcome" blah, blah, blah...
if that were true, you would know exactly what "something is rotten in Denmark" means & what it might portend for you, especially when (if?) Wave attempts to drop $25M more paper on the street.
edit2: it's a big deal awk.
see Mig, this is exactly what i referenced earlier in edit to you:
"Come on clear, get off your high horse (or is it a donkey?) and explain in clear language what you mean."
you insult me & then expect me to help you?
gibberish? man, you & a few other DDers are the KINGS of gibberish.
read SEC Reg SHO to discern whether there might be a few exceptions/exemptions etc., & don't expect any short-squeeze anytime soon IMO!
edit: btw, awk, is wavx the only stock you have ever owned?
edit2: http://finance.yahoo.com/q/hp?s=WAVX.BE
awk, i'm doing just fine thanks. you infer "temper" where there is none. i'm also verrrrry glad i'm not holding wavx right now b/c if there is any "self-destructing" taking place, it's in Lee (IMO).
ciao!
edit2: fine awk -- i'll spoonfeed it (a little).
go back to my first reference of Berlin (w/the cusip #) & click the link.
go to the boerse home page & type in "WVY"
the rest is up to you - follow the breadcrumbs.
at least i don't post in Swahili like hypeagalooo.
edit: nice (balanced) post Weby -- good luck!
edit2: MIG -- the polemic writings & attitudes of certain wavoids often results in a killing the messenger approach to anything wavoids would rather not know.
remember back in April 2000 when my broker told me that margin calls in all Naz stocks would be liquidated firm-wide later that day & i posted a warning to that effect on RB that anyone who was facing a call should start covering it in the morning or face forced selling later that day?
wavx went from around $35 ----> $10 by 2pm that day & wavoids claimed i was posting FUD in order to buy their shares!
awk - will you always love Berlin?
have you done *any* DD on how Wave might be connected to Berlin?
you definitely should IMO.
i cannot disprove the negative, but there is ZERO to support any contention regarding DCIS & Wave 'cept maybe that powerpoint slideshow some select wavoids were shown by SKS at the SanFran dinner the week before the summer P&D (reg FD anyone?)
as for the origin of "yer" - it was an efficiency thing originally & i have seen it posted by many others (on SI/RB/yahoo/i-Hub) since i started using it on yahoo back in 97/98 --- same goes for "iggy."
HBG - yer constructive dialog critique is well intended IMO. i don't feel the need to spoonfeed the info/analysis & Mig is on the cusp of a J.D. he should be able to read the filings & draw some conclusions in order to help out his fellow wavoids IMO. heck, Mig owns something like 60-70K shares if his posts are truthful, it would seem he would be following the docket quite closely w/such a sizeable investment. IMO w/his legal education & the size of his capital risk, it is reckless for him to not follow the litigation.
anyway...
edit: HBG - reasonable suppositions IMO
it may be related to the fact that multiple claimant groups are still jockeying for Lead Plaintiff/Lead Counsel status. Moreover, Bill Lerach's (Milberg-Weiss) group (i think) published a purported notice in Barron's (on or about Feb. 4, 2004) which had no binding legal support as a valid notice for PSLRA claims.
additionally, the same group published a subsequent notice on PR Newswire which ostensibly failed to note the Barrons purported notice (among at least one other technical deficiency which currently escapes me).
Wave opposed the purported notice/s on these grounds (as did other claimant groups) & one of their bases for extension was that no Lead Plaintiff has been assigned (yet).
The fact that there is still no LP, might give them some breathing room & P's counsel/s may have voluntarily agreed not to seek default judgment by virtue of that outstanding matter.
the parties might also be in settlement dialog.
it's comical IMO that the masters of DD will connect whatever stray dots they can find regarding obscure technology, yet their beloved company is facing millions in liabilities & they don't even follow the docket!
edit: gee Mig, i'm sorry that you don't know how to follow a federal case docket.
also, as i'm sure you are already aware, claims were brought under SEC laws by some plaintiffs and derivative claims brought by other claimants - haven't dug into the various dockets deeply enough (there are around 13 individual cases) to know whether they have all been consolidated on Ponsor's docket (though if they haven't it's likely they will be eventually).
i think the NJ cases were transferred to Mass btw.
edit: "alleged accusation"?!?
check the docket in the Sousa matter.
unless the Mass court is around a week behind in updating their records, Wave appears to have missed the deadline.
btw, "[t]hey see no point in litigation because they are going to fail..." you do realize that certain claims against the company & its principals, if reduced to judgment, may not be dischargeable.
of course you do.
edit: not only might some of those claims not be dischargeable, if reduced to judgment, but most D&O insurance policies have express exclusions for such liabilities.
there might also be a viable "alter ego" argument which could pierce the corporate veil (IMO).
it seems emotions have compromised judgment Mig.
sorry to see that.
it's rather easy to keep tabs on the various dockets -- i would think you would offer this service to fellow wavoids.
seems there is some infighting amongst the various claimant groups as to who will be the lead plaintiff based on, inter alia, the magnitude of the losses. One guy (Rogers -- from the Trebistch group i think) lost over $50K.
will you be opting out of the class?
good luck Mig...
Mig - do you have any theories as to why Wave's lawyers would move for an extension "up to and including May 15, 2004" & then not file any answer, motion or other response?
it's fair to say that Wave's lawyers have their hands full -- it's apparently 2 lawyers versus about 40+ & they have to litigate on multiple fronts (not to mention compliance w/the formal SEC investigation). but it would seem that blowing the deadline to answer could possibly result in a viable motion for default judgment from the Sousa camp.
i'm completely shocked that they didn't respond w/in the timeframe they requested from J. Ponsor.
wonder if they are being paid for their services promptly?
khillo - one must assume that the SSPX is liquid howiever.
have you looked at SSPX lately?
pps = $1.17 & vol = 62K
Wave's SSPX position is trapped -- they can't unload w/out crushing the bid, unless Saflink is willing to take it of their hands.
CL -- " I am in the camp that believes some how between now and June there will be an intel type of announcement."
if so, do you expect a SECOND formal SEC investigation?!?
"Although it may not take us to 5, it should provide the liquidity to fund Wave and provide an exit for me and my new position."
too bad most wavoids won't see the sanity of that strategy & will invariably ride any future P&D up & back down again, presumably to lower lows (IMO).
"Sure hope my wife never finds out I own wave again"
i'm guessing there are many here in such a position!
and claiming a "Gain on sale of marketable securities" is pure nonsense.
Wave's basis for those SSPX common shares (after adjustments from preferred conversion) is somewhere b/tw $3-4.
they have nearly a 75% loss on the SSPX "investment."
they should sell the block to Saflink asap.
they had around $5M in cash at end of March (though most of it is already obligated for accts payable, etc).
are they gonna issue S-8 shares for all the legal fees?
good thing the wavoids approved the increase in the A/S.
wavoids are in far deeper DooDoo than they seem willing to admit...
good luck!
awk - Wave filed two separate motions for an enlargement of time to answer, move or otherwise reply to the class action complaints. In the second motion, they asked the court to grant them "up to and including May 15, 2004."
for some reason, Wave has not filed any responsive pleadings (or any dispositive motion/s) that i could find.
any theory on why Wave asked the court to extend their time until May 15th and then they did not file within that deadline?
btw, do you have a Canadian brokerage account?
wonder who else might have one?
know of any exceptions to Reg SHO?
are things good?
ciao!
OT: yaya - just don't issue a PR & dump the stock!
yaya Paris is lovely in the Fall...
good thing Wave pays around $100K/yr in rent for an "office" there!
surprised they don't yet have a "satellite office" in Monaco or Nice.
that Parisian banking initiative is really heating up! revs should flow any day now.
maybe Wave should also have an office in Berlin?
connect those dots baby!
yeah & more than half of it was dumped in a "get me out at any price" fashion in a matter of minutes. always a sure sign of market acceptance & definitely bodes for a surging price in the future.
http://139.142.147.22/GifChartEngine.dll?interval_day=6&cus=&indexSymbol=&securityType=1...
sprechen ze deutsch?
might wanna learn.
http://www.berlinerboerse.de
US9435261030 / 892595
do not own any wavx - folded my hand here many months ago during a CC when the spraguespeak was scrawled on the wall. btw, the price was almost 150% > than today.
don't want to own wavx unless & until they are cleared by the SEC and demonstrate that someone is actually buying their thneeds.
seriously doubt either will ever hauppen.
JMO!
looks like concentrated selling/exit "at any price."
w/Wave at the cusp of World Domination why oh why would someone (fund?) dump over 150K shares like that? seems sorta unlikely that it was a profitable trade unless they held it since last year when it was in the $0.70 range.
do they know something you don't?
http://139.142.147.22/GifChartEngine.dll?interval_day=6&cus=&indexSymbol=&securityType=1...
of course the SEC is investigating that trading!
when were the infamous Intel & IBM PRs released?
when did insiders dump millions of shares at allegedly artificially inflated prices?
when did PJS go on the record w/Smart Money claiming he only sold 100K shares (which was later disclosed to be 500K shares) and that he couldn't sell when the stock was a buck & that there was so much volume that a piddly 100K shares just didn't seem to matter?!?
when did the infamous San Francisco wavoid/SKS dinner transpire?
IMO the SEC is (or already has) reconstructing(ed) trading for July & August (among many, MANY other things most likely).
but hey, the shelf registration filing was purportedly declared effective (per a claimed Callahan e-mail).
everything must be kosher, right?
good luck!
greg_s --- QED
those 60M volume days are under SEC scrutiny - oem
actually, i wrote: "Wasn't one of Wave's many former business models related to pay-per-view over fiber"?
And it was a rhetorical question, unlike the second line of the post to which i reply, which seemingly should end w/a question mark.
btw, please restore the most recent post which was improperly and arbitrarily deleted as it did not violate the TOU in any way.
tia!
PS Snack, did those chips ever make it stateside on that purported boat from Asia? did the boat sink? get stopped at customs? did the purported boat even exist?
Verizon to Sell Video Over Fiber in 2005
Wasn't one of Wave's many former business models related to pay-per-view over fiber? Isn't it also more-or-less the primary model for the money losing indulgence of the WaveXcess subsidiary?
Funny, Verizon doesn't seem to know how "cool" their stuff could be if they would only let Wave through the door.
SO, did Wave sell *anything* today?
http://story.news.yahoo.com/news?tmpl=story&cid=569&ncid=738&e=2&u=/nm/20040519/tc_n...
Wed May 19, 3:56 PM ET
Add Technology - Reuters to My Yahoo!
By Justin Hyde
WASHINGTON (Reuters) - Verizon Communications Inc. (NYSE:VZ - news) will begin selling video over fiber optic lines to homes and businesses in 2005, part of a long-term strategy to fight cable companies on their own turf before they erode too much of Verizon's traditional telephone business.
While the first video services Verizon will offer will mimic those available from cable and satellite television services today, Verizon executives say the company will eventually move into higher-technology formats that could offer far more options to viewers.
"We have a huge opportunity," Paul Lacouture, Verizon's president of network services, told Reuters. Fiber optics "allows us to get beyond parity with cable and get to a video product that will be different from the traditional 150 channels on cable and satellite."
The largest U.S. local phone company outlined the plans as part of its strategy to spend $1 billion on laying the foundation for a fiber optic network connecting homes and businesses in nine states. The company has committed to making the new network available to one million homes and businesses by the end of the year, with another two million added next year.
Fiber optic cables use light to transmit data at far greater speeds than copper wires, but cost far more to install and only about 70,000 U.S. homes have such connections today. Verizon and other "Baby Bells" have long regarded networks built on fiber optic cables as the ultimate weapon to fight off challenges from cable companies and new competitors.
Verizon said it would launch its fiber optic service by offering voice and high-speed Internet connections, including one with download speeds of 30 megabits per second, about 10 times faster than the fastest cable high-speed links.
While those services will be available this year, Verizon executives said it would likely be the second half of 2005 before its video-over-fiber business was up and running. The company must get cable franchise licenses, as well as arrange agreements with cable networks.
Bob Ingalls, president of Verizon's retail marketing group, said while Verizon's first video services will look like cable, the fiber optics will allow it to expand to new services, such as wider numbers of high-definition channels.
Analysts contend "Baby Bells" such as Verizon must attack cable companies head-on as the cable industry begins to win more phone customers with Internet-based calling services.
"Video offers (phone companies) the potential for new revenue streams and an opportunity to stem customer losses," said Yankee Group analyst Aditya Kishore.
Gee Orda, almost sounds like you don't wanna know anything about the "bogus" class action claims?!?
do you think that view is representative of most wavoids?
it would seem that S/Hs would be inquisitive about something this serious, something which could ultimately cost the company millions & millions of hard-earned greenbacks.
maybe cuz the $25M shelf registration was filed & is (per a purported Callahan e-mail), effective, that invariably means the class actions will be dismissed?
has Wave answered the pleadings?
Wave filed two different motions for enlargement of time to respond to the Complaint in the Sousa v. Wave matter. The most recent motion for extension requested that the court permit them up to and including May 15, 2004, yet there is no such responsive filing on the docket.
looks like they missed the (twice extended) deadline - wonder why?
please feel free to delete this message, as anything that doesn't portend for 9 consecutive Qs of blah, blah, blah, presumably has nothing whatsoever to do with the business of Wave!!
tia.
"...even if it is sometimes as hard to get a straight answer out of [SKS]."
speaking of, curious omission in the 10Q:
7. Contingencies
Securities and Exchange Commission Investigation
On December 17, 2003 Wave received an Order by the Securities and Exchange Commission (the “Commission”) regarding a formal investigation. The focus of this investigation is on certain public statements made by Wave during and around August 2003, as well as certain trading in Wave’s securities during such time. The Commission has not concluded that there has been any wrongdoing and Wave is cooperating fully with the Commission on this matter. Wave cannot predict the potential effect on Wave as a result of this investigation at this time.
Purported Class Actions
Several (9 known) similar purported class action complaints have been filed between January 23, 2004 and February 23, 2004 most in the United States District Court for the District of Massachusetts, seven (7) of which name Wave, its Chief Executive Officer, its Chief Financial Officer and two (2) of which also name Wave’s Chairman of the Board, as defendants.
The purported class action complaints have been filed by alleged purchasers of Wave’s Class A Common Stock during the purported class period July 31, 2003 through February 2, 2004. The complaints claim that Wave and the named individuals violated the federal securities laws by publicly disseminating materially false and misleading statements regarding Wave, relating to Intel and IBM agreements, resulting in the artificial inflation of Wave’s Class A Common Stock price during the purported class periods. The complaints do not specify the amount of alleged damages plaintiffs seek to recover.
9
------------------------------------------------------------------------
Wave intends to defend the actions vigorously. At this time, Wave is unable to predict the outcome of these actions.
Derivative Actions
Wave has learned of three (3) other complaints filed in the United States District Court for the District of Massachusetts. Wave believes that the complaints name all of its directors as defendants and allege claims for breach of fiduciary duties and other claims. The allegations are very similar to the allegations made in the purported securities class actions because the allegations concern the very same alleged statements alleged in the purported class actions. Wave is also named as a nominal defendant, although the actions are derivative in nature and purportedly asserted on behalf of Wave. Wave is in the process of evaluating these claims.
Wave intends to defend the actions vigorously. At this time, Wave is unable to predict the outcome of these actions.
SO, why did Wave fail to mention that the claims specifically allege insider selling of millions of artificially inflated shares as a result of the alleged public dissemination of materially false and misleading statements?
SAFE?!?
"it's a SAFE surmise that the SEC investigation is, basically, old news."
you impute a no-liability finding based merely upon the shelf filing? yes, the SEC investigation is indeed "old news," but there is nothing material IMO to substantiate this claim.
"But, the fact is, ONE common-sense way of interpreting that remark is to acknowledge a simple fact: it would, in all probability, COST MILLIONS for Wave to defend its IP."
another fact is that they already have a few issues which will necessitate significant legal fees - wouldn't surprise me if they end up issuing a bunch of S-8s to cover part or all of the fees (weeeee! more dilution).
orda -- my price?
there literally is *no* price low enough for me to take the risk the wavoids are willing to take at this particular time.
but a far as aggressive trading moves (which i no longer make w/wavx), Zen & i have been bantering to & fro regarding some recent calls.
1) around 04/13/04 (at around 2:45 or so), i suggested to D&O that he had a platinum platter chance to get right on some of his earlier bad buys (during a CC coincidentally) & recoup some losses > $2.
2) a day or two later i mentioned that IMO there was no hurry whatsoever to own wavx (for those that inexplicably feel compelled to own it, that is) @ $1.55 (+/-) b/c it would be @ least 33% cheaper in a few weeks.
well, it's been a few weeks & wavx will inevitably break a buck (very) soon IMO & could even dip below $0.80.
it might get stuck down there fer a while b/c My Three Spragues got lots & lotsa paper to float (not to mention some obvious macro bases which are prompting the jettison of so-called "junk" stocks from many portfolios).
there could be a decent swing trade over the next few weeks for those w/a cast-iron stomach, but the risk of something like an SEC-imposed trading halt is far too great for my taste.
good luck!
A Wave of Delusion
http://yahoo.smartmoney.com/onthestreet/index.cfm?story=20030826&afl=yahoo
By Scott Patterson
August 26, 2003
DAVID STONE DOESN'T like to give stock tips. But in 1995, Stone, who owns a company that makes digital-camera cleaning products, came across an investment he couldn't resist. "I told anybody who would listen that this was a long-term stock," says the 53-year-old from his home in Cape Cod, Mass. "I really think the potential that Wave Systems has is phenomenal. Just think if you'd bought Intel in '78."
Tech fever, it seems, is alive and well in Lee, Mass., a sleepy town nestled in the heart of the Berkshires, a continent away from Silicon Valley. This is where tiny technology outfit Wave Systems (WAVX) was founded in 1988 under the name Indata. It's also the spiritual home of a small, fanatical group of investors known as "Wavoids" who see Microsoft (MSFT)-like potential in Wave Systems' future.
No matter that the company's share price fell from an intraday high of $50.75 in March 2000 to a low of 75 cents in March 2003. No matter that Wave Systems, which makes digital-security hardware and software products for the Internet and e-commerce, has never posted a profit since going public in 1994, and, as of June 30, had racked up $246 million in losses.
Despite this grim reality, Wavoids continue to display an unwavering commitment to their beloved investment. And it seems to be paying off. For some Bubble-era nostalgia, take a glance at the stock's recent activity. In late July, Wave seemed doomed to the corporate bone yards of the over-the-counter bulletin board, its shares having changed hands for less than a buck for most of the year. (The Nasdaq delists companies whose stock trades below $1 for more than 120 consecutive days.) Then came news of a software-bundling deal with Intel (INTC) and a partnership with IBM (IBM) — twin events that caused Wave's stock to spike more than 500% over the course of several days, reaching an intraday peak of $5.24 on Aug. 5.
The numbers tell only part of the story — but what numbers they are. On July 30, Wave closed at 84 cents a share on volume of 136,700. On Aug. 1, it closed at $3.65 on an astonishing 63.7 million in volume. (By way of perspective, Microsoft, a company nearly 2,000 times larger than Wave, sees average daily trading volume of 55.8 million.) The activity seemed to be fueled by two sources: momentum traders who had long ago written off the company for dead, and frantic covering by short sellers who had bet on the company's demise. There's little evidence that institutional investors played much of a role; according to Media General, just 3.8% of Wave's 52 million outstanding shares are institutionally held.
After the dramatic rally, Wavoids took to Internet message boards to boast of their vindication. "The time for caution is past," wrote one fan on Raging Bull. "Those who have eyes to see let them see. But remember to wear sun glasses. Cuz this is going to be white hot."
"Where do we go from here?" wrote another on Investor's Hub. "My bet is onward and upward."
'The Fun Thing About Wave'
Wave's followers continue to believe that the company's digital-security products — primarily its Embassy suite of cryptographic hardware and software — will play a central role in a burgeoning sub-industry known as trusted computing. The movement, called "TC" in the trade, is being heavily promoted by a not-for-profit organization called the Trusted Computing Group (TCG). Backed by such tech behemoths as Advanced Micro Devices (AMD), Hewlett-Packard (HPQ), IBM, Intel and Microsoft, the TCG is coordinating what some say will be the biggest technological shift in the computing world since the advent of the Internet. Wave's July 31 announcement of the Intel deal fell under the TCG umbrella.
If the TCG achieves its far-reaching goals, nearly every computer made in the next few years will contain hardware and software that provide advanced encryption and decryption services for online transactions. In Wave's most starry-eyed vision of future glory, its software and its Embassy chips would be included on most of those computers.
Wave Chief Executive Steven Sprague isn't afraid to speculate on his company's upside possibilities. "This is a technology that could ship on 40 or 50 million PCs and realize an installed base of users that's measured in the tens of millions," he says. "The fun thing about Wave is that it has the potential of tremendous scope."
Burn, Baby, Burn
Unfortunately, Wave has many short-term hurdles to overcome — problems the Wavoids seem willing, even eager, to ignore. For all the talk of paradigm-shattering killer-apps, Wave will have to pull off a minor miracle just to stay in business. Its meager $50,131 in revenue during the first half of the year led to a net loss of $9.8 million, or 24 cents a share. The company has just $6.6 million in cash, and is burning through about $1.2 million a month, according to CEO Sprague, down from $1.6 million earlier this year after layoffs, slashed marketing budgets and other cuts.
Wave has floated the idea of selling additional shares to solidify its capital structure — but the company has given few specifics as to when any offering will take place. HC Wainwright has served as an underwriter in the past, but it's not clear which investment banks will underwrite the next offering. Wave doesn't have much of a relationship with Wall Street, and no analysts cover the stock. In fact, most of the semiconductor analysts we called for comment hadn't even heard of Wave Systems — a reality that flies in the face of claims of Microsoft-like growth potential.
The company's cash troubles were partially allayed when several managers exercised stock options after the early August run-up, adding a quick $2.6 million to company coffers. An additional $1 million was recovered when Wave's former chairman, Peter Sprague, Steven Sprague's father and the founder of the company, repaid a loan Wave had previously written off as uncollectible.
This is no cause for celebration, however. Wave's liberal use of financial-engineering techniques to benefit its officers has long been a sticking point even among its most devout shareholders.
Board of Protectors
In 2001, certain executives took out big personal loans from the company to pay various outstanding debts. Wave's board later approved bonuses matching the amounts of some of the loans executives used to pay down their debts — a maneuver similar to the one at the heart of the Tyco International (TYC) accounting scandal, which has resulted in criminal indictments of three Tyco officers who, prosecutors allege, used the company as their "personal piggy bank." The Sarbanes-Oxley Act of 2002 made the practice of granting personal loans to officers illegal.
Wave made a loan of $250,000 to the company's chief financial officer, Gerard Feeney, in 2001 so he could pay capital-gains taxes on exercised Wave stock options. After extending the due date on the loan in 2002, the company approved a bonus on March 27, 2003, "in an amount equal to Mr. Feeney's obligations with respect to such loan and accrued interest," according to Wave's 2003 Schedule 14(a) proxy filing. Feeney repaid the loan with the funds from the bonus.
Wave also made loans in 2001 to then-Chairman and CEO Peter Sprague totaling about $1.06 million — during a year in which the company lost $48.7 million and saw its stock price plunge 40% to $1.33. In 2002, Wave's compensation committee approved a payment of a bonus of $174,391 so that Sprague could repay part of the debt. This left Sprague owing $999,518. On March 31, 2003, Sprague resigned as chairman and chief executive and assumed the CEO post of Wave subsidiary WaveExpress. His son, Steven Sprague, was named CEO. The company put in place a loan-loss reserve against the elder Sprague's debt in a Nov. 15, 2002, 10(q) filing with the SEC, essentially forgiving the loan.
Then, on Aug. 5, Wave announced that Sprague would repay the loan in full. Why would he pay back a debt the company had already written off? Look no further than the company's skyrocketing shares. "Before [the run-up], the stock was under a dollar," says the 64-year-old Sprague, who served as chairman of National Semiconductor (NSM) from 1965 to 1995. "I saw a window of opportunity, and it was trading in such huge quantities that selling 100,000 shares didn't make much of a difference."
"He just wanted to put [the issue] behind him," says Wave spokesman David Collins, of Jaffoni & Collins, a PR firm. "The loan wasn't only a problem for the company from a cash-flow standpoint, it was increasingly a problem from a shareholder-perception standpoint."
Wave says it made the personal loans to Feeney and Sprague so that they wouldn't have to sell shares to pay their debts. But the record shows that the Spragues have a long history of insider selling. On Jan. 7, 2002, for instance, Peter Sprague sold 60,000 shares of Wave at $2.46 for $147,800. The following month, he sold an additional 10,000 shares at $2 each, and on March 5, as the stock's price continued to fall, he unloaded another 10,000 shares at $1.83. Steven Sprague, meanwhile, on Aug. 6, 2003, exercised options on 150,000 shares, most of which he sold for a total of more than a half a million dollars. And on Aug. 5, CFO Feeney sold 100,000 shares at $5 a piece — right near the stock's 52-week high.
Against the backdrop of Sarbanes-Oxley, it's difficult to avoid the conclusion that the loans were suspect moves for a company that was hemorrhaging cash. James Fisher, director of Emerson Center for Business Ethics at Saint Louis University, says that in such situations, the company's board of directors is often to blame for being too pliant. "If the board is under the thumb of management," says Fisher, "then there's some justification for concluding that these are ill-considered policies most likely designed to enrich the managers, who, from all appearances, haven't been able to guide the firm successfully."
There can be little doubt that at the time many of these decisions were made, Wave's management exercised significant influence over its board. Peter Sprague was chairman of the seven-member board during his reign as CEO. Steven Sprague, formerly the president and chief operating officer, was a director when his father was chairman. Notably, the board also includes George Gilder, author of the popular 2000 book "Telecosm" and a lead cheerleader of the tech boom, who has been a director since the company's IPO. "Having insiders sell stock in a company that's precarious is more damaging than having the company make loans to its officers," says Gilder in defense of the board's decision. (Gilder declined to comment on Wave's future prospects, citing concerns about potential class-action litigation if the company should fail.)
Steven Sprague isn't unaware of the power he and his father have wielded. "Put yourself in the shoes of any board of directors that has to make that call against somebody who probably hired all the people that are on the board," he says. "[Complying] was the right thing to do."
The Clock Is Ticking
So what of the Intel and IBM announcements, which sparked the furious run-up in Wave's stock in recent weeks? The IBM partnership seems to have been misread by the markets; it will generate no direct revenue for Wave, according to the company. The Intel deal, meanwhile, is difficult to quantify, since financial terms weren't disclosed. Intel said it would bundle Wave's software and services on an industry-standard TP-enabled chip known as the Trusted Platform Module (TPM) embedded on a future Intel desktop motherboard, the internal chassis that holds the chips that run personal computers. The deal is similar to a March agreement for National Semiconductor to bundle Wave's software on its PC21100 SafeKeeper security chips, but nothing has been released about the financial terms of that arrangement, either.
Intel, for one, doesn't seem to view the contract as earth-shattering. Spokesman Robert Manetta says the motherboard's rollout will take place in the fourth quarter, but declines to give any further details. "We have a lot of motherboards," says Manetta. "This is just one."
Wave says it's unable to release financial details on the deal because of a nondisclosure agreement with Intel. During its second-quarter conference call with investors on Aug. 14, however, CEO Sprague hinted that it could be worth around 50 cents to $1.50 per motherboard. At potentially millions of units, the deal could indeed be quite lucrative for Wave.
But in typical Wave fashion, management hinted at grand potential while declining to give specifics. The company left its revenue and earnings guidance for the rest of the year unchanged. This doesn't sit right with some. Pacific Growth analyst Brian Alger, who dropped coverage of Wave in August 2002, says that while the company can't release specific figures on the Intel agreement, it should update its revenue guidance for future quarters in which it expects to book sales from the deal. "If there is an expectation for X amount of revenues, and that has materially changed, isn't there an obligation for [management] to inform shareholders?" (Alger doesn't own shares of Wave; Pacific Growth has had an investment-banking relationship with the company in the past.)
Perhaps the problem is the unpredictability of the TC movement itself. Given all of the various players and their competing agendas, it might take years for TC activity to ramp up significantly, says Peter Glaskowsky, editor-in-chief of the trade journal "Microprocessor Report." In all likelihood, Intel won't roll out a dramatic number of TPM-enabled motherboards in the foreseeable future. "The value [of the deal for Wave] a year from now or two years from now I think remains very, very low," says Glaskowsky. He estimates that TC won't be a ubiquitous application for at least four or five years, after Microsoft launches its new operating system, code-named Longhorn, which is expected to carry broad TC capabilities. By then, of course, Wave could very well be out of business.
And with giants like Microsoft and Intel devoting resources to the effort, it's not difficult to imagine smaller players like Wave being marginalized or squeezed out completely. Microsoft, for one, has a long history of this sort of thing.
Ross Anderson, head of the Computer Laboratory at Cambridge University, is unmoved by Wave's claims of a future as a TC titan. "I don't think Wave Systems is a big deal," says Anderson. "From the point of view of the big TC picture, Wave is below the radar." Anderson, a vocal critic of the TC movement for its willingness to cede control of the Internet's information flow to a few big companies, thinks Microsoft has used Wave merely as a "competitive threat" in its dealings with Intel.
Yet Wave's CEO proudly defends the company's all-or-nothing approach. He says he favors big, home-run deals that will cement Wave's status as a TC goliath to short-term deals that would offer much-needed cash now. "If you're looking for me to provide security for a midsize medical-services provider, that's not what Wave Systems is about," says Sprague. "While I could do that and collect a few hundred thousand dollars in revenue, I'll do that at the jeopardy of the broader opportunity. And the broader opportunity has been close enough to touch."
Such thinking played well during the Bubble — but seems hopelessly out of date in 2003. Most investors nowadays would scoff at the notion of a nearly insolvent company turning away easy business. "You have to question that," says Saint Louis University's Fisher. "The promise of a long-term bonanza can cover a lot of short-term shenanigans."
A Few Warts Among Friends
Diehard Wavoids remain undaunted by the company's many shortcomings, and downplay the late-1990s-style excesses. "Sure, I think [management] is a little rich in compensating itself," says Wallett Rogers of Palmyra, Wisc., a retired corporate attorney who's been invested in Wave since the late 1990s. "But it doesn't bother me. You have the warts on the one hand, and on the other hand, you have a company that's potentially the size of a Microsoft three or five years from now. I've made a rational decision based on the relative importance of the warts and the company's potential."
If enough investors feel the same way, Wave may actually survive. But will it be the next Microsoft? Don't bet on it.
My wife and I used to work for this company, and the maneuvers the executives get away with are stunning. This Smart Money article explains.
Wave Systems is always on the verge of running out of money. Consistently, however, they manage to find financial backing at the last moment. This article by Scott Patterson at Smart Money does a great job of describing what goes on within the company. This excerpt reveals the behavior of the company's board and executives:
"Wave made a loan of $250,000 to the company's chief financial officer, Gerard Feeney, in 2001 so he could pay capital-gains taxes on exercised Wave stock options. After extending the due date on the loan in 2002, the company approved a bonus on March 27, 2003, "in an amount equal to Mr. Feeney's obligations with respect to such loan and accrued interest," according to Wave's 2003 Schedule 14(a) proxy filing. Feeney repaid the loan with the funds from the bonus."
The entire article is worth reading. The media has generally been focused on the behavior of executives at large-cap companies. Perhaps it is time to look at the small-cap publicly owned companies as well.
http://homepage.mac.com/edahand/iblog/B1323778479/C590598292/E905065596/
is approx. $100K/year for an "office" in Paris a good use of corporate resources given this company's complete lack of revs?
HWP bought CPQ b/c of Wave?!?
"Weve been waiting around for these guys to feed us a bone only to be led done the path of bankruptsy so one of them can buy us for a song."
ROFLMAO!!! Wave wrote off the entire Embassy chip inventory this year btw.
reg, PJS seemingly knows all about this tactic -- after years of apparent infighting w/his father-in-law (Milos Krofta -- much of it reported by the Berkshire Eagle), Krofta Water was eventually driven into bankruptcy.
PJS reportedly acquired the BK estate of KWI for something around $600K. meanwhile, PJS was in default w/a $1M "loan" from Wave (who had charged-off the "loan" as uncollectible).
it was also reported back then that the IRS had levied a $1M (+/-) lien against him (whether it was satisfied is unknown).
but to his good fortune, Wave released the infamous INTC & IBM PRs in late July/August & the stock went into parabolic P&D mode. PJS reportedly sold at least 500K shares into the hype (though he hasn't filed a form 4, so who knows what prices he received for his dump - perhaps as much as $2.5M).
oddly enough, he apparently only disclosed dumping 100K shares to the SmartMoney reporter in classic Marie Antoinette "let-them-eat-cake" style b/c there was so much volume in the P&D that "100K shares didn't seem to matter all that much..." (paraphrasing).
somehow Wave ostensibly concluded that the company founder; fmr CEO; fmr CofB; single largest holder of Class B shares; father of current CEO; & CEO of majority-owned subsidiary was not an "insider" (req'd to disclose changes in beneficial ownership w/in a few biz days of the dump).
9+ months later...
caveat empty
wavx consistently tanks post-CC <$1 is inevitable
maybe that's when Wave announces the $5.7M DCIS contract you claim they won months ago?!?
& maybe those NSM SafeKeeper chips are still on that boat from asia that SKS wondered aloud about oh so many CCs ago?
& maybe "mind-blowing news is literally a few weeks away"?????????
lugan it's true.
Ibrahim (aka "Tony") Elgindy & his infamous horde at Anthony@Pacific were apparently clued in to wavx by a trader who bounced around here for many years.
it also seems that "Tony" was privy to an early release of a very negative piece on Wave in Barrons. Tom Claugus is a hedge fund shortseller who proclaimed in Barrons that essentially wavx was the junkiest of all dot.bomb junk stocks & these A@P minions seemed to know about a few days ahead of publication.
long story short: wavx tanked hard on their short attack.
"Tony" was recently arrested boarding an airplane w/a false ID & a bunch of cash. he was out on bail during prosecution for a variety of other alleged securites-related offenses. his bail was revoked & he is being held awaiting trial last i read.
SO, in some ways wavx is sorta like the Zelig of stocks!
ever hear the one about when Huey Lewis was once a wavoid?
maybe some other time.
ciao!
do you think i care?
good luck dahling,
SPIN
As a reminder, Peter Sprague publicly claimed to have sold 100K shares into the spike (in the August 2003 SmartMoney article, "Wave of Delusion"), noting that with the volume, "it just didn't seem to make any difference" (or some such excuse).
it was later disclosed that the actual # of shares he dumped was five times the amount he had previously represented to a financial reporter.
did he really think the 500K shares dump (somewhere in the vicinity of $2M) would never come out?
btw, what makes you so sure that the "untimely" Form 4 filings is THE SEC finding? isn't it equally possible that this is merely one of the SEC's findings?
what you declared to be the end may really be the beginning.
it's gotta hurt to have been buyers of those P&D $2.29 shares just two weeks ago... nearly a 50% loss.
how's that call looking now Zen?
i know, i know -- "hole digging."
right,
SPIN
PS $300K in Q revs? $urrrrrrrrrrrrrrrrrrrrrrrre -- about as likely as that phantom $5.7M DCIS contract.