Sunday Night Rant...
I thought I would utilize this opportunity to try and talk about and get input concerning a myriad of issues. I think we can put the PPS decrease to rest and in MY opinion only we are pretty much at the bottom. (1.75 should be support). This event had no underlying fundamental event attached with the exception of some share dilution. It actually should have been less due to the fact less shares were put on the market than originally thought. There is no doubt an insider/institution was selling and it is time to move on.
The ECB appeal was heard back in April in Spain regarding the suit brought by DSS. (DSS won original case). The ruling was supposed to be released 2nd quarter but no answer yet. This would be a seminal event for the company if positive ruling. Any thoughts from legal experts very much welcome.
Company HQ move: Maybe not that important but I think this will go to where the real decision making power is. Per the new charter; “No approval is required to change company HQ, whether in or out of current operating jurisdiction”. Since the CEO and COO are in Mclean VA it would seem that Rochester, NY is not the place of choice.
As I have pontificated in the past I see absolutely no reason for DSS in its current state to continue operating the way it is. I actually was taken aback this weekend by the cost of revenue in plastics/packaging/printing. Even though the % of revenue went up, the costs followed right along with it. The new DSS is a technology company and the legacy businesses are just a drag on revenue. The company will be an “operating” company by virtue of the new authentiguard product. The fact that it now contains technology from Bascom/Virtual Agility/DSS marries all the companies together.
The Novell settlement will be the biggest litigation piece going forward IMO. This would be the third company to admit infringement and create a precedent the court just can’t overlook. As with most cases such as these, prior art is always the argument and whether there was enough available to argue for the defense. The interesting part is that the patent was applied for back in 2001. I can tell you that back at that time there was very little available as far as social networking. Back then Netscape and AOL were the kings. This could get very interesting after that.
Funding Round: I think this is coming. The new DSS needs to purchase IP that generates revenues. It also has to get this new security product out to the market. In the past Jeff Ronaldi stated that he did not need to dilute stock, that he has plenty of financing available. One obvious target to me would be Virtual Agility. If you take their 7% stake that cost $2M then that would place this company value between $25-$28M. This to me would be a main target. Even some type of incremental acquisition would work well here.
My final comment will be that DSS now has to define their model to the street. Using the term ‘hybrid” is nice but that can mean anything. I know, I know all the definitions and what that connotes but the fact of the matter is we currently have Printing-Packaging-Plastics which have nothing to do with IP. They also “currently” contribute nothing to the new product. There appears to be a niche for them if authentiguard takes off but I think it is just cheaper to contract out.
One of the greatest things I believe started happening immediately is the constant issuing of stock to officers of the company will cease and desist. DSS was just plain horrible. A stock that had no insider buys (they didn’t need to!) is just bad business. I will say with pretty good confidence, Hudson Bay will effectively stop that going forward. The days of stock based compensation costs of 247% are hereby gone.
As always, these are merely discussion points for the board to consider in the upcoming week. GLTA
AI
