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  • howardmorris howardmorris Jun 17, 2009 12:13 PM Flag

    It looks like liquidation value has been...

    ...set. Allow +/- 10% for profit and the tight trading range today and it looks like the Street thinks SOAP is worth $4.50.

    I'd take $4.50 right now if I could get it. No one wants my shares at $4.25!

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    • >> Btw, what's your background ? Mine is in Enterprise Software. <<

      I take my hat off to you. Your background gives you an edge in choosing software companies to invest in.

      I've done a bit of hardware design (MEMS and microelectronics packaging) plus a bit of niche software design (multispectral image processing and data compression) for the aerospace industry.

      >> No, I did not get IPO, just regular traded shares. If I remember correctly, the first day pop was one of the biggest during that time. <<

      IPOs are interesting. An acquaintance of mine was a VP at e-Toys and invited me to work there in 1998 before it went public, with the promise of lots of cheap stock options. I declined because I couldn't envision the stock being worth much and was a bit reluctant to work 18-hour days just to get the options. Then it went public (in the spring of 1999, if I recall correctly) and set some sort of IPO record. I think the IPO price was set at something like $20, and it zoomed to over $60 on the first day. I kicked myself.

      Anyway, I knew several people who worked for the company (we had all attended the same university). My VP acquaintance had been fired shortly before the IPO but he retained boatloads of options which he exercised and sold as soon as he could. He became a multi-millionaire. Employees still working for the company were prohibited from selling any of their shares until 6 months after the IPO, by which time the stock was trading at around $35 or $40. Most of them held their shares, expecting them to go back up to $60. But the company filed for Chapter 11 bankruptcy within a year or so, and my friends (with the exception of the VP) rode their shares down to zero.

    • Yes, Software Revenue Recognition was a hot topic in the 90s. CA even used to have "33 day month" before the CEO was jailed. Because of its visibility, ORCL has a pretty rich multiple in Software Industry.

      No, I did not get IPO, just regular traded shares. If I remember correctly, the first day pop was one of the biggest during that time.

      Yes, they should get some $$ for the coded product. You just need good mktg folks, coding can always be figured out.

      Btw, what's your background ? Mine is in Enterprise Software.

    • Incidentally, jap, you are right about revenue booking being different in the software business. So I guess I should use the term "billings" rather than "revenue". I own Airvana, which is subject to these sorts of rules. I follow Airvana's billings rather than GAAP booked revenue, which can be very lumpy. But the point remains that Soapstone might be able to get few million bucks for PNC. If there's a 20% probability that PNC could generate $50 in annual billings a few years out, it ought to be worth a few million. Of course, I don't know what the actual probability of this scenario is, nor does anyone else here, because nobody can predict whether PBB-TE will have a resurgence. I merely claim that a 20% probability does not lie outside the realm of reasonable conjecture.

      By the way, you said that you bought Avici at the IPO. Did you get actual IPO shares, or did you buy on the open market on the day of the IPO?

    • Although this argument is just a waste of time...

      To have a $50 mil in software revenues/yr, the bookings should be at least 2 to 3x. With just a few carriers (5 ??), I don't think they would be willing to pay $20 mil in service / license revenue.

      Again, if there was that much potential people would be jumping all over it. A little guy like me can create an investment fund of $1 mil USD in no time, if there was an opportunity in this code.

      Wonder what keeps you active on this board after selling your shares :)

    • How do you know that a 20% probability of $50 million of more in annual revenue a few years from now is way too high?

    • $50 mil revenue assumption is way too high. In software industry you can't book all the revenue at once. Revenue gets booked for installation and based on the progress of the implementation, % revenue gets booked every quarter. I believe even the maintenance portion gets recognized on a quarterly basis.

      So, for a company to have $50 mil in first year, it's lot of customers.

      Honestly, if the product will generate $50 mil and can be bought for $1 mil there will be thousands like me who can create a LLC with few members and pick up the source code. I doubt there is so much in the code and if there was other companies will be fighting over it.

      I wish there was some acctg folks on this board to better explain the NOLs from AVCI > SOAP > New company.

    • >> When you know someone is desperate to sell their home, you are going to bid cents on the dollar. <<

      Exactly my point. I wouldn't expect PNC to fetch more than a token sum during the liquidation. I just said that PNC might become valuable to somebody someday in the event that PBB-TE makes a resurgence, and therefore someone ought to be interested in picking it up for pennies on the dollar, given the current opportunity to do so. If you were in the network business and you could buy the PNC source code for, say, $2 million, and there was a 20% probability that it could generate $50 million per year in revenue two or three years from now, wouldn't you be tempted to buy it?

      Even if PNC only fetches a few pennies per share, I tend to believe that Soapstone management has a fiduciary obligation to get SOMETHING for it, rather than just giving it away. But I haven't been through a liquidation before, so I'm not familiar with the mechanisms. Would PNC get sold to someone? Or would someone simply purchase Soapstone as a shell company?

    • When you know someone is desperate to sell their home, you are going to bid cents on the dollar. It doesn't matter what the future holds for the property / product.

      I have been in a similar liquidation / cash distribution in 2004. Net Perceptions was the name of the software ended up becoming a steel holding company.

    • I would tend to agree that management will have to try to get some sort of value out of PNC for shareholders or else risk a lawsuit. But this is my first time witnessing a liquidation, so I'm not really familiar with the protocol. If PBB-TE makes a comeback in the wireless backhaul market (which is a distinct possibility), then PNC could become quite valuable to somebody.

    • Mgmt will get creamed with lawsuits if they try to sneak the patents to Lightwolf without proper DD.

      It's just not the competitor's but also big guns who might not want to have this neutral software in the market.

      My guess is, there will be a buyer at $~5/share simply to take control of this shell company.

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