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Message: Strategy....CenturyCom and Emit

Strategy....CenturyC... and Emit

posted on Jun 18, 2006 08:59AM
I agree and have posted same about the inherent conflicts in goals between PTSC and TPL, and you can throw in PTSC`s past financiers in that boat. Three influencing entities with differing (initial) goals working in ``partnership``. Falls under my perceived status of PTSC as a ``cash cow with a lot of hair on it``.

First, in response to my old buddy Emit - I`ve considered your posts and seem to migrate to the same conclusion: if enough cash comes in, issues such as those you express (as well as the other ``hair``), should eventually ``go away``. It`s dependent on how much money how soon. Consider this: if PTSC could receive $500M in cash over the next year (which is very possible IMO), would all these issues still exist, and would we still be sitting at a buck a share? Even if PTSC ignored everything else in the way of ``what to do with the money`` and took the simple route of just giving all that money (after taxes, which will come into play) back to shareholders in the form of dividends, I would expect the PPS to rise considerably. Cash cow... Then throw in other avenues such as share buy-back and/or buy-out/merger with another company having a NAS/AMEX/NYSE listing, marketable tech, and a mound of tax write-offs. But you are right, the ``hair`` will clog the pipes until enough cash comes in and these other avenues are actively pursued.

In response to CenturyCom, I understand your ``confusion``, as it would seem logical that those actually producing the infringing components would be the ones to pay the piper. But that is not the case. Someone posted the other day patent infringement ``rules`` which suggested that even those who facilitate the use of end products with infringing components (i.e., companies that don`t even directly ``touch`` the infringing components or the products containing those components) may be liable.

How to stop the ``flow of liability``? Contractually, via a ``Patent Indemnification`` clause. That clause places all patent infringement risk with the seller - the buyer is off the hook. Use of such a clause is fairly widespread, but comes with a premium (i.e., incorporate the clause in the contract, and the cost of that contract goes up - with the assumption of all such risk, the seller can demand more consideration). The other day, someone suggested that the US Gov`t/DoD is a huge infringer. Probably, but the US Gov`t/DoD will not accept a contract without a ``Patent Indemnification`` clause attached (unless things have changed in the last few years, which I doubt), and most of their direct suppliers (Lockheed, Raytheon, etc.) won`t either. They KNOW the risk could be huge (especially considering the volumes involved) and are willing to pay the premium to avoid that risk.

Hope this helps.... And I KNOW nuttin`! But I do suspect something may be up based on Friday`s close - 6% rise on 25% of the total day`s volume in the last 15 minutes.... Could be nuttin`, could be sumpin`.

SGE

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