as i see it, page-8

i think this overview says it all about SEN.

in short....UNTIL.....they show soemthing.....avoid!

from the Australian


Senetas back on the boards
CRITERION
Tim Boreham
November 24, 2006
Senetas (SEN) 42c
THEY'RE baaaack! After a five-week absence from the boards, the IT house and day traders' favourite resumed trading just as the faithful gathered for yesterday's AGM.
With expected news of the $26 million capital raising and accompanying strategic investment failing to materialise, the shares did well to lose only 4.5c, or 10 per cent.

There's a profit warning as well: first-half profits will be down by "more than 15 per cent" on the previous $1.2 million. Given the length of the self-imposed suspension, management had desperately wanted to seal the deal before the AGM. "We turned out to be wrong, by perhaps days," said chairman Francis Galbally.

So with the vaunted 55c-a-share raising not going "as smoothly or expeditiously as we would have liked", all management could offer holders was "short-term pain for mid to long-term gain".

Galbally maintains the nub of Senetas's revenue problems - its underperforming global distributor SafeNet - has been fixed. After a SafeNet management reshuffle, a "mutually more collaborative" relationship is showing results. Alas, these aren't showing on the sales line - or at least, not yet.

"Senetas expects far better results in the second half as the expanded business model begins to affect results for product sales," Galbally says.

Management yesterday was mum on strategic investment - confidentiality reasons and all that - but reassured folk the investment would "further enhance our penetration of key markets".

Despite the share suspension, Senetas has remained a hot topic in share chat rooms. Many holders remain convinced about the market prospects of the company's home-grown high-speed encryption products, but some have been convinced (probably wrongly) that Senetas will be taken over.

Criterion backed Senetas last year when the company appeared to have a decent head of revenue steam, selling to high-security customers such as police and military authorities.

These home-grown products could still be the best thing since the last best thing, but Senetas simply isn't selling enough of them to justify a $190 million market valuation.

It's possible the proposed transaction will be a company-transforming (that is, big) deal, given Senetas has no debt and $5.5 million of cash.

Criterion rated Senetas an AVOID at 35c on September 14 after the lacklustre full-year results. We misjudged investor willingness to give Senetas the benefit of the doubt, but see no reason to change that call.

Senetas has emerged as an accident-prone disappointment, but we remain open to evidence to the contrary.