Q: Dear Mr. Jacobs.
The participants on InvestorsHub discussion board are concerned that MSVN may have developed the technology to interact their copy management protection for Itunes/Ipod. How are we doing in that development process. MVSN is likened to Goliath and we as David, it will not take a lot for them to overpower our position with major labels. We are also greatly concerned about not being able to get out of the pinks and unto a major board. How are we progressing towards that objective?
Lastly, we are concerned about our falling pps. We are on the threshold of dynamic growth and our earnings potential appears to be skyrocketing
however our pps is lower now than when we were in the development stage and not earning a dime in revenue, why are we taking such a beating? Tough questions, maybe so, but they are all of great concern to myself and my fellow investors many of which have been with Sunncomm from the first year. Hope you will find the time to respond.
Thank You. (8/23/2004 10:30:59 PM)
A: Let´s take ´em one at a time. SunnComm believes that Apple and their iPod technology is proprietary to Apple. Thus, we have chosen a path that respects the proprietary nature of Apple´s technology and that involves cooperating with Apple to provide consumers with the ability to convert music found on MediaMax CDs to Apple´s iPod. No other competitor has attempted this path, and I believe our goals regarding iPod playability on MediaMax CDs is the honorable way to go and will ultimately reward SunnComm, our shareholders, and the consumers. Time will tell.
Regarding your "David and Goliath" scenario, I think that your analogy is correct. Our largest competitor is a billion dollar company, and the odds of SunnComm becoming the market leader in optical media copy management has always been a longshot. However, at this time, MediaMax is the ONLY copy management system used commercially in the world´s number one CD marketplace, the US. What we do at SunnComm is focus on the deliverables to both our record company customers and their consumers. Nothing is more important to us than developing a copy management product with 100% playability that incorporates value-added features intended to increase awareness to consumers of the artist´s and other rights-holder´s wishes to limit the number of times that their work may be duplicated. We have seen our competitor´s new product and we believe that MediaMax 5.0 is superior in many ways. Again, time will tell - we can only do our best.
We have begun a process that is intended, with the help of SEC Regulation SHO and some very smart consultants, to flush out all individuals who are naked short our stock along with brokers with failed deliveries of SCMI on their books. This plan will culminate in moving off the OTC exchange. Management has made the decision not to reveal the details regarding this plan until they happen because doing so might jeopardize the plan´s effectiveness.
The market influences on SunnComm´s price per share are complex and factors, other than our business successes, seem to have more impact on our pps. There are plenty of stock market analysts out there who will tell why the market did what it did yesterday, but none who can consistently predict what it´s going to do tomorrow. SCMI is no different. General knowledge has it that once SunnComm lands enough contracts to become profitable, our share price may become more stable and cause our shareholder´s less heartburn. All SunnComm employees are shareholders as well, and want the same things as our other shareholders.
In summary, there are a lot of "ifs" about SunnComm. As you have said that you´re a long term investor, I don´t have to tell you that investing in SunnComm´s stock is no "get rich quick" scheme. Paraphrasing Warren Buffett, if you believe in a company´s business plan and you believe in its management, then a lower share price should represent a buying opportunity. If, on the other hand, you wake up one morning and the company has changed either its management or its plan, then you need to decide whether to continue holding your shares. The same is true if you lose confidence in management.
One thing is certain - they´ll be more surprises to come... Hopefully, most of them will be pleasant, but certainly not all of them will be. I believe that over the last 4+ years, the SunnComm people have proven that they are better trained than our largest competitor at dealing with whatever situation comes their way.
Best regards,
Peter
