Stocks For Dad
TMF Parlay's Stock For
Dad
Silicon Gaming, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SGIC)") else Response.Write("(Nasdaq: SGIC)") end if %>
2800 W. Bayshore Rd.
Palo Alto, CA 94303
(415) 842-9000
Company Snapshot
Hi Dad,
Remember a few summers ago when we went white-water rafting? Well, here's
a stock for you that will likely provide as many thrills as hurtling ourselves
through the rapids. The stock is SILICON GAMING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SGIC)") else Response.Write("(Nasdaq: SGIC)") end if %>, the
newest slot machine manufacturer on the gaming scene.
Here's what we're hoping for: Silicon just recently started shipping the
next generation of slot machines. Named Odyssey, the machines look like they
belong on the Starship enterprise. The machines are personal computer based
and use a high-resolution touch screen instead of the traditional reel based
machine. The awesome animation, graphics, and stereo sound are drawing large
crowds wherever they are placed. To say the machines are an innovation would
be an understatement.
Having the machines use a computer instead of a "hard wired" silicon brain
is a huge quantum leap forward. It's not just that the current machines are
extremely popular, but Silicon is on the leading edge of what could be the
start of an entire new trend in the slot industry.
Here's what to look out for: The company has some rather large shoes to fill
since the stock has a market cap approaching $150 million without a single
dollar in trailing sales. As investing in any development stage company,
this risks involved with this stock are certainly much higher than average.
The company has lost roughly $25 million in the past four years developing
the new machines. As the machines move from development stage to volume
production, continued burning of Silicon's roughly $30 million cash horde
is expected.
On the bright side, the company is essentially debt free. It also looks like
the money the company has spent researching the next generation of machines
has struck gold. It may take a few quarters for the company to sell enough
machines to become profitable, but the groundwork has been laid for the company
to take a large chunk of the slot machine pie. We are not betting on earnings
in the next year, we are betting on a whole new technology.
Just like the stock I gave to mom
a month ago, Silicon is no stranger to volatility. One look at the yearly
chart will show just how far and fast the stock can move. I shouldn't need
to warn you how risky it is buying a development stage stock that has essentially
zero trailing sales.
Enjoy your gift, Dad. If nothing else, it will be exciting, just like rafting
through the rockies.
Love, Paul
Next Article, TMF
Cheeze's Stock For Dad, WD-40 |