interview faber, page-28

Crusty and others

I have been in NY on business for 2 weeks and too busy to watch TZ other than peripherally. Things were hot over there and I don't just mean the weather. Funny times we live in.

Now that DKR have essentially sold out the vast majority of their notes the residue is probably fewer than a million shares. These will be converted mostly after they are sold on and/or off market. The news we have been waiting for concerning the IPO timetable appears close now. DKR was a distraction at best and a considerable irritant at worst. The timing of the IPO is in the hands of the underwriter and so is the placement price. We can reasonably expect news to be released in the next 2 weeks assuming they wish to avail themselves of the advantages of listing before the CS arrangement as underwriter expires before Christmas and in order to be able to regain the QVT notes and interest due prior to the end of 2008. QVT will regain their funds and walk away with 3 million options at $4 as their price for valuable support.

This assumption of the desirable timetable assumes notification of the full 21 week timetable. The company has already stated that the first 8 weeks may already be complete so the first we hear will be the SEC filing leaving only 13 weeks to the IPO. There may therefore be a little more time available to book additional orders. The valuation will be based on the booked orders running forward for the full 3 years, especially the value of orders based on platform applications. The numbers have been canvassed but the unit price often overestimated from the demonstration units. The practical units will be much cheaper. We now know they are internet addressable so the Intevia Enterprise applications (along with associated systems software) is all available for commercial applications.

Company briefings have intimated if not baldly stated that the offer price to the clients at IPO will be based on a low pe of about 15-20 as applies on the ASX. The pe on the NASDAQ wil therefore supply the expected profits to those making the investment. We can expect a few million shares will be needed to supply the demand for the stock at placement as well as to establish a sufficient market. CS may obtain additional shares at the delist by offering the average price applying on the ASX at the time. The company expects there to be little difference between the delist offer and the placement but I suspect there will be a few dollars difference. We shall see whether the prospectus and the associated valuation it contains provides existing investors with the confidence needed to retain all their holdings for transfer. I for one will be keeping all my shares for a long time after the IPO as the value rapidly escalates.

DF in his current interview is forthcoming, in a relatively subdued manner, in expecting rapid adoption. I for one expect a sales figure achieved on an annual basis in the automotive sector alone in excess of 100 million pa since Visteon is just 1 of a dozen high volume applications and Visteon (not TZ) has stated that the 2009 market is 16 million. We should therefore expect about $1.25 profit per share fully diluted for Visteon alone. Enterprise, the vast number of computer applications, and all the many others we know are in the pipeline or pre-production will, over 3 years amount to an expected profit well above $10/share. On that basis anyone selling too soon is seriously ill advised.

The company is well on track, and news will flow when it is in the interests of the company (and therefore shareholders) as well as the underwriter to release it always remembering that commercial in confidence factors remain of real concern. Yes, I remain bullish, increasingly so given the news we have had released. For those who still think there is little to base their investment decisions on let me remind you that the last annual report about 18 months ago in which many early adopters were identified appears on about page 18 from memory of the list of releases, so hardly a complete news blackout. There will be the usual detractors of my upbeat analysis but all can engage in the same analysis with ample inputs supplied in recent months both in- and outside the TZ management. DF fairly adequately summed up the position and since I expect the list price to be based solely on the earnings over the next 3 years then any perceived delay in listing simply brings with it an increased price. That can hardly constitute anything other than very good news. It certainly beats NY sentiment and has the added advantage of being essentially recession proof because adoption of Intevia will increase competitiveness since the current prices are little different to existing alternatives that will soon be recognised as no alternatives at all.