Back Liquidmetal Pioneers the Materials Frontier (Cont'd --- Reprinted courtesy of Forbes Nanotech Report -- www.forbesnanotech.com) LQMT Stock Right now, LQMT stock is a battleground. The stock has overwhelming insider ownership amounting to north of 65% of outstanding shares. The largest institutional shareholders Fidelity and Putnam, Represent less than 5% of outstanding shares. Another notable institutional holder is legendary commodities trader Paul Tudor Jones' Tudor Investments. Aggressive short-sellers are currently short an overwhelming 3 million of the company's 5 million shares in public float. The biggest weakness short-sellers point to is manufacturing: the company's inexperience in high-volume manufacturing and its yield problems in previous quarters. Liquidmetal initially struggled with low molding yields on its phone casings, but Kang says the problem was temporary and is being addressed. One major step was Liquidmetal's recent hiring of a leading manufacturing exec from Alcoa who ran the $1.3 billion Howmet Castings structuring castings business. A recent Barron's article said that manufacturers are unlikely to use a single-source supplier like Liquidmetal? valid concern because the company is the only one mass producing bulk alloys. Yet cell phone manufacturers will always be able to use their current plastic material as a back up, given the mold designs are interchangeable. This is another of LQMT's advantages. Barron's also downplayed LQMT's Samsung deal as a "limited contract." But Kang tells me their just in time relationship with Samsung is sound and ongoing. Without mobile handset revenues, Liquidmetal still tripled revenues year over year in its recent Q3 ending September 30, with sales of $3.7 million from coatings, development contracts and bulk alloy parts for an MP3 player. Before its IPO, Wall Street forecast Liquidmetal revenues of $200 million in 2003. This estimate has since been ratcheted down to $140-160 million. At a recent price of $9.50, LQMT is trading at less than 3 times expected 2003 sales - hardly a nosebleed valuation for a company expected to improve next year's sales by more than 1,000% over 2002. With $40 million in cash and equivalents and no long-term debt, Liquidmetal's balance sheet is sound, but can support only a limited expansion of manufacturing capabilities. Merrill Lynch forecasts LQMT sales of $7 million in Q4 '02 and $15 million in Ql '03, with major orders coming in from Samsung, LG Electronics, and TCL. Hedge fund manager Edward Neugeboren of Third Ridge Capital owns a big chunk of the stock and thinks it is worth over $15a share in the near term based upon a valuation of 4 times estimated 2003 revenues. "This is a revolutionary technology with payoff today," says Neugeboren. "Liquidmetal has a similar reward profile to investing in biotech and nanotech, but with significantly reduced risk given that there is product on the market today and virtually limitless applications. Published jointly by Forbes Inc. & Angstrom Publishing LLC www.forbesnanotech.com 1   |   2   |   3 go to top