mul pricing itself out of the market, page-5

lum - icurpoint I have concluded that the product is good, possibly excellent, at least competitive.....

At least one other shareholder in the Top 20, and both his broker and a broker I use from time to time believe that the product isn't the problem. It is the way they are marketing it, by this I am referring to their desires to rent out the signs to advertising companies. Now I understand why Rodd is doing this, he is trying to establish an ongoing revenue for the company rather than just achieve a "one off" profit from sale. However big industry players like Clear Channel are reluctant to go for this model, they prefer to buy the signs outright and then profit from finding the advertisers themselves (of which they have all the contacts).

Clear Channel recently signed a contract to purchase outright signs with Daktronics in the US to be placed along highways.

By persisting with the "rental" model I think Rodd is banging his head against a brick wall. There have now been at least two examples of the problems that can be faced when dealing with several third parties including councils (Barcelona and now Istanbul). My argument to Rodd is that Lumacom can maintain ongoing revenue by "servicing" the signs, an agreement which should be able to be written into the contract at the time of purchase. The other benefit of a "sale and servicing" model is that it will provide Lumacom with a strong cash flow much faster and may prevent the need for further dilution of stock, especially if part payment up front can be negotiated.

Aristocrat is a classic example of how well a company can perform by sticking to its grass roots, doing what it does best and just selling their product. Aristocrat operate on a "sale and service" model, and remove any headaches that are associated from dealing with third parties.

So in answer to your question Icurpoint, I am positive that the product is at worst "competitive" and well capable of establishing a niche position for itself within the outdoor advertising market. I believe that if Rodd is mature enough to explore alternative options as to how he can better market the product then he is well capable of managing the company.

There is undoubtedly potential for this company but they have to concentrate on what they do best, and that is manufacturing a good product and start transferring the headaches to other companies (like Clear Channel) who are better equiped to deal with those aspects.