mxl- green alert >20c

Mxl has been sliding for the last 3 to 4 weeks to Christmas and I have been watching it very carefully and doing more research. In late Nove and early Dec mxl has been issuing a number of positive announcements of contracts, including the tie with Microsoft. The oppies expiry has been the drag and putting a lid on the price. In the last couple of weeks the main shares actually traded down to 10c as arbitrage occured between the oppies and mains but in the last few days I can see the strength coming back into the mains as we go past the oppies expiry on 31st Dec.

There is still minority of people selling out of main to get cash to take up oppies at 5c. Once the oppies are truly exercised then I think there will be spike in Jan. Obviously people are still on holidays and the wiser investors are accumulating at the 11cents level but by mid Jan once we get into the full swing it should get back to its pre oppies level of closer to 15c and above.

Last year about this time I did a valuation based on their operations then and came up with a value of about 15cents. That is not taking into account the many announcements during the year and the Microsoft tie. If included I would have thought the value to be in excess of 20c perhaps closer to 25c as mxl has indicated that they will be cash positive this calendar year.

I believe mxl is undervalued at the moment with the oppies recently but with that out of the way and many millions dollars in the bank as a result ofthe oppies being, and they will all be exercised since they are underwritten. So with a lot of cash, some revenue alreaady in the pipeline and with more announcements to come, we must be at a low level at the moment.

A numeber of positives in summary for the new year:

- ready cash in the bank
- new development on their software, now internet base
- Micosoft tie which will see new markets and sales strategies- market totally ignore this but with any positive annoncement, this will be the fuel
- asian distributor yet to be announced
- more Aust contracts for coming year. You may have read that RMIT had problems with their system which lost them millions of dollars, perhaps Mxl could be a winner on that one
- more global market in addition to the ones announced last year. Therefore, sales from ones announced last year and more new potentials announced particularly Asia
- still no sign of competition
- mxl has come a very long way and they have been working on this for at least 2 years, this is the marketing phase ie not much development, it is a matter of selling and getting the cash in with aproven product. In a companys life this is probably the best phase to be in as far as investment potential is concerned.

And last but not least, in the Age, Malb yesterday, MXL (although it was featured as MXL1 but I think it is a typo) was mentioned by Paterson Ord Minnett as a wildcard possibility for the stock pick of the year 2003.

I will contact the company in the new year to have a full briefing of their plans and potential for the new year.

Research yourself and see if you agree.

Bigprofit