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Parkervision Inc. Message Board

  • notios70 notios70 Dec 4, 2007 11:51 PM Flag

    Elements of a stock promotion and PRKR - Part I of II

    In my opinion, PRKR epitomizes the pattern of a stock promotion. This is a reiteration of an earlier post, so skip the attack responses unless you really want this thread to stay alive indefinitely to be read by the big funds checking this board:

    PRKR seems to fit the pattern of many "promotional" technology stocks, except that it's really unusual for a stock promotion to maintaining significant market cap for so many years without demonstrating commercial uptake of their technology. I could be wrong. Others who make the same point could be wrong. But if you dig deeply enough, you will see that company has made it impossible for anyone outside the company to see the details of the technology without being under a non-disclosure agreement (NDA). The company argues, not surprisingly, that the secrecy is necessary because the technology is too valuable to be revealed and because patent protection is not sufficient.

    The problem is that the company claims to have shown the technology, on an open-kimono basis, to several potential customers over the past many years. If they liked it, where is the revenue? We'll never know if they didn't like it, because PRKR made them sign away their right of free speech in order to get a look. So they can't talk. But word gets around in an industry, and according to the Barron's article on December 2nd, the industry considers PRKR's technology to be a bad joke. But you decide. Either way, PRKR will not reveal all of the facts, and everyone involved deeply enough to know the truth is restricted from speaking freely.

    I say that this extreme secrecy is more of the Emperor's New Clothes ploy, where the company has effectively muzzled anyone who could claim to be in a position to discredit the technology. In turn, the company can true to discredit all critics by saying they cannot know, because they haven't been given access to the details.

    I argue that if the company has valuable technology it would have generated material revenue years ago, and that at this point any past competitive strength of the technology is now behind the curve and uncompetitive. I could be wrong, or I could be right. Only time will tell. You should look at the facts, think about it, and decide for yourself whether PRKR is a promotional stock based on overhyped mediocre technology or whether PRKR is the next Qualcomm, worth many billions.

    I use the term "promotional" in the extremely pejorative sense common on Wall Street, where it means a company that is pretty much the stock market equivalent of an old-time medicine show. Medicine show hucksters used to sell "magic cure-all formula in a bottle" when it was really just foul-tasting stuff spiked with alcohol. The smartest hucksters never went to jail because they knew exactly where the legal line is and were careful not to cross it. But their customers (in the stock market sense it's the share buyers) were getting rooked.

    Here are the elements of a promotional stock that I see when I look at PRKR:

    This message is over 4000 characters, so the rest is in Part II.

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    • >>>a STOCK promotion is designed to inflate the STOCK so the promoters can sell it and benefit. <<<

      Tell 'em, Rounder, you know all about it.

      Notios

    • Notios: another distortion. You are including equity awards as "annual salary" when in fact, taking compensation in the form of equity that you never cash-in is completely opposite of a "Promotion" agenda ...

      there's an "aircraft" on the books at $340k as net value at cost, not as a recurring expense. So, again, you are misleading people.

      There is also nothing about a plane being utilized for personal use, which would of course be a primary audited focus. Like many small markets, JAX is likely an expensive and inefficient place to fly commercial. In such areas, companies frequently avail themselves of more cost and business effective alternatives, like buying a portion of a private plane. Parkervision did something like this at some point and exited a deal like that in 2003. They may have an arrangement now. But how material could it be with the only reference in the financials being the net value of $340k showing for an ASSET called "aircraft" (not a recurring expense as Notios would have you believe)

    • notios

      Why do you exaggerate to try and make a point. The salary was 325,000 not half a million in 2006, the remainder was in options which have not been excercised, and there has never been a corporate jet. At one point there was a percentage ownership but that was dropped several years ago. Why not stick to the actual numbers . From your point of view there should be no need for exaggeration. You believe this will fall under its own weight. Why diminish your credibility?

    • >>>how does this so called promotion work for the promoters<<<

      Annual salary: Half a million
      Corporate plane: third of a million
      Everyone calling you sir: priceless

    • how does this so called promotion work for the promoters Notios?

      Trellus recently reestablished their position and has been adding aggressively. Why don't you teach the board about them too. thanks

    • The final element of a stock promotion is the unwinding. We haven't seen that yet, have we?

      According to the 9/30/07 report, Wellington sold shares in the third quarter at a speed that reminds me of the speed of light: 186,100 shares sold in the quarter.

      Here's the link on MSN, which has a different presentation from Yahoo, although the numbers generally agree.
      http://moneycentral.msn.com/ownership?Symbol=PRKR

      Here's the Yahoo link:
      http://finance.yahoo.com/q/mh?s=PRKR

      Some institutions bought, some sold. It is difficult to draw clear a conclusion one way or the other from the raw data.

      One thing to keep in mind is that holdings are reported both at the fund level and at the institutional level. The buy/sell decisions are made at the fund level, by the portfolio manager of each fund, so it is quite possible (although embarrassing) for one fund at an institution to be buying while another is selling.

      Not all accounts at an institution are actively managed funds, so there could be an account where someone has just given the shares to be held by the institution and the institution has no discretionary power to sell them. There are also index funds, which don't make buy/sell decision.

      It's interesting that the biggest buyer in the quarter, one which actually bought its entire position in the quarter, 696k shares, is called Natexis Arbitrage. They are Paris-based. According to a former employee who lists them on his internet resume, their game is "credit vs. volatility arbitrage, proprietary trading on convertible bonds, long/short equity, risk arbitrage, trend-following portfolios, statistical arbitrage (including real-time automatons), volatility arbitrage..."

      In other words, Natexis looks like a "fast money" shop. If they bought in the 3rd quarter, they are either even or underwater, if they still have their 696k shares.

      The regulator shows that "Natexis Arbitrage originated from Soci�t� pour la Promotion des Activit�s Financi�res (SPAFIN), a company formed in 1979 and a wholly owned subsidiary of Natexis Banques Populaires and now part of the Capital Markets branch of Groupe Natexis Banques Populaires.

      SPAFIN's business, which consisted primarily in managing the Group's equity interests and investing cash funds in the equity markets, evolved to encompass arbitrage transactions. This constitutes an investment service and thus requires investment firm status."

      That seems to confirm that Natexis is a fast-money shop that may be arbing options in PRKR stock. Where a French company would get ahold of enough options in PRKR stock to arbitrage 696,000 shares is a very interesting question.

    • Disclosure requirements were greatly improved by the SEC since this article in 2004. Even then, brokers had to file 144's and the insiders did have to make a filing, albeit sometimes in a way that was difficult to decipher. However, for insiders who owned greater than 5%, like Jeffrey Parker, anything like a swap fund or forward sale would also show in his 13d and two amendments, and it doesn't.

      All his filings are online with the SEC going back to 1998. If any of the shares were swapped or sold forward it would be in the proxy now too. If it had happened in the past there would have been filings, including a 13d amendment. Apparently Mr. Parker doesn't even have shares in a margin account - which would be consistent with what he just told us in the 8-k and confcall.

      Mr. Parker's entire history is as follows (feel free to check me on the SEC's site). In mid-2001 he sold 165k shares to his mother for $3 million and some property. In 2002 he flipped a soon-to-expire option for 20k and sold another 19k - total gross proceeds before the exercise cost and tax were $814k. In 2003 he purchased 248k shares in a secondary for $1.25 million - he did not get the bargain warrants offered to outside investors. That is it.

      He also has a history of giving very complete disclosures that appear to have gone beyond the requirements of the SEC.

    • >>>you didn't give one real example of what you say you are talking about - un-reported insider transactions.<<<

      Here you go: (read the whole article via the link, here are a few excerpts)

      http://bear.cba.ufl.edu/demiroglu/fin4504fall2004/Articles/article18.htm

      Open Secrets: SEC Looks at How Insiders Use Exchange Funds --- Technique Lets Big Investors Transfer Stock and Skirt Full Disclosure, Tax Bite

      By Randall Smith
      7 September 2004
      The Wall Street Journal
      (Copyright (c) 2004, Dow Jones & Company, Inc.)

      Regulators and investors have assailed corporate insiders at companies such as Enron Corp. and Global Crossing Ltd. for bailing out of their company's shares during the market bubble, while less-informed shareholders were left holding the bag.

      But many other insiders have for years routinely disposed of stock through a little-known vehicle called an exchange fund without clearly disclosing the action to investors.

      The practice allows executives with large chunks of one stock to diversify their holdings, tax-free for a time, by transferring shares to an exchange fund, which pools them with other stocks owned by other big-league investors. Each exchange-fund investor winds up owning a stake in what resembles a mutual fund. No taxes are incurred immediately because the stocks remain in the fund instead of being sold on the open market.

      Now, the Securities and Exchange Commission is trying to learn whether dozens of corporate insiders used such exchange funds during the late 1990s to reduce their economic stake in their companies without raising a red flag to investors, according to people familiar with the probe. The agency suspects that numerous corporate insiders may have sold stock in the past six years without full disclosure to investors.

      ......

      Though tougher regulations now define when buying and selling must be disclosed, the requirements for making public such exchange-fund swaps remain murky. And that ambiguity could mean less information for investors who rely on disclosures of insider trades as barometers of how an insider feels about the company's prospects.

      Using exchange funds "disadvantages" investors and "provides a vehicle for potential abuse" because shareholders might not realize executives are selling their stock, says Michael Painchaud, president of a Seattle research firm specializing in trades by corporate insiders.

      The SEC, which declined to comment on the current probe, has contacted some of the companies where executives contributed shares to exchange funds in the period between 1996 and 1998, according to people familiar with the inquiry.

      A case in point is William T. McConnell, former chief executive of Ohio bank Park National Corp. He wanted to dispose of $1 million of his company's stock without triggering immediate taxes or sending "a message to the stockholders that I had lost confidence" in the company, he says in an interview.

      ......

      Yet a number of corporate insiders haven't treated their exchange-fund deals as an outright sale. They believe this is totally proper, in keeping with regulatory rules. Among them is Ronald B. Stakland, a former senior vice president of Telegroup Inc., who contributed 100,000 Telegroup shares with a market value of $1.3 million to an Alex. Brown exchange fund without disclosing the transaction as a sale. Shortly after the transaction, Mr. Stakland left the company, which sought bankruptcy-law protection from creditors in 1999 and later was delisted.

      "I had the whole thing thoroughly reviewed by attorneys and accountants," Mr. Stakland says.

    • Notios, you didn't do this, you didn't give one real example of what you say you are talking about - un-reported insider transactions.

      <We have merely established that illegal mechanisms exist by which a promoter of a company could engage in abusive illegal transactions that could be hidden offshore, by means of which the promoter could benefit without any public record of any sale or transfer of founder's stock.>

    • >>>>No retelling of the stories of abuses by other owners and managements of other companies, of course, has any bearing on any of the facts of this matter.<<<

      I agree.

      We have merely established that illegal mechanisms exist by which a promoter of a company could engage in abusive illegal transactions that could be hidden offshore, by means of which the promoter could benefit without any public record of any sale or transfer of founder's stock.

      Are we going to keep seeing the assertion that the lack of reported stock sales by the founders "proves" that PRKR cannot possibly be a scam?

      PRKR might be perfectly genuine, just a legitimate company that has had a slow acceptance of its revolutionary technology. They may announce, any day, a huge new contract for material product and/or license revenue. That's possible, I say.

      It's also possible that PRKR is very well executed "Emperor's New Clothes" scheme, that it may be perfectly within the law, and that it will continue indefinitely as long as investors keep pumping money into the company despite the lack of commercial success.

      Take your choice and place your bets, ladies and gentlemen.

      Notios

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