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To: Roy F who wrote (208)7/17/1998 8:10:00 PM
From: robert b furman
   of 6932
 
Roy is that you snagging this little jewel at 2 3/4.Kudos if it is


Bob

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To: robert b furman who wrote (209)7/18/1998 7:46:00 AM
From: Roy F
   of 6932
 
Bob, no it wasn't me. I was just commenting on the size of the trade, considering the average volume is only 18K/day. Unfortunately it appears there was another 10K on the sell side a little later.

Roy

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To: Roy F who wrote (210)7/25/1998 10:28:00 AM
From: Roy F
   of 6932
 
Earnings PR:

investor.msn.com

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To: Roy F who wrote (211)7/25/1998 7:35:00 PM
From: Roadkill
   of 6932
 
Thanks for the link, Roy. I've been digesting the report for a few days. At first glance, I thought the 12% revenue gain was impressive, considering that the latest Q contained no OEM revenues. After reflection, however, I'm not sure if the 2Q last year had a whole lot of AMSC OEM revenues, either. If 2Q 97 had no AMSC revenues, then 2Q 98 was no big deal, although it does indicate progress. If 2Q 97 did include OEM revenues, then I think 2Q 98 was impressive, particularly in light of the efforts being made to improve margins by slicing the SG&A fat. I don't mind the extra R&D expenses, but I do mind all the administrative people just hanging out. Finally, I'm happy with the improvement in gross margins. I'm hoping for a break-even 3Q, with sequential revenue growth. That'll make me buy more. Until then, I remain a little leery, but am not selling.

Did anyone hear the CC? Any interesting words from management?

RK

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To: Roadkill who wrote (212)7/27/1998 4:19:00 PM
From: Roy F
   of 6932
 
RK: Have requested a copy of the conference call from KVH. Response from KVH corporate communications, from Alice Andrews, included this for you:

Also, you may want to advise "Roadkill" that the 2Q97 included $1.3
million in AMSC sales, so 2Q98 communications revenues represent a
substantial gain in direct sales. The tape includes some discussion
of the OEM vs. direct sales progress.


I'll post the synopsis of the CC after review.

Regards,

Roy

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To: Roy F who wrote (213)7/27/1998 4:59:00 PM
From: Roadkill
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Thanks for the update, Roy. I look forward to reading your synopsis and getting your opinions regarding the conference call.

It looks like Ms. Andrews wasn't sure what to make of my screen name. Perhaps she thought it referred to KVH's stock price over the last six months. :o)

RK

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To: Roy F who wrote (213)7/28/1998 12:38:00 AM
From: Roadkill
   of 6932
 
Roy, rather than be lazy and just ask for your analysis, I thought I'd give some of my own. Alice Andrews said $1.3 MM of 2Q 97 communications revenue was due to AMSC, leaving $.8 MM for direct sales. Last Q's communications revenue -- $2.2 MM -- was all direct, representing a 175% gain in direct communications sales.

Before I get too excited, I should note that (I imagine) many of these direct sales would have been OEM sales, but that option wasn't available. Still, this represents nice demand, and shows KVH's ability to sell directly to the customer -- which presumably gives the company fatter gross margins -- and demonstrates KVH's strong sales channels.

As the press release states, navigation revenue was up 19% from 2Q 97, a healthy gain.

At this point, I don't really care about EPS. I'm concerned about revenue. If this growth is sustainable, and if the military is serious about FOG technology, we'll end up just fine.

I'll be interested to hear what, if anything, the CC said about recurring air-time revenue for TracPhone. As I recall, in last year's 2d or 3d Q CC (I used to listen to them all, but lately have been too busy), management said that we should start seeing air-usage revenues in 2Q 98. KVH receives a cut of the usage revenues for the phones it sells. Talk about fat margins! Yahoo!

Sorry. Got a little carried away there. I think I'm going schizo. I saw my CHKPF and TDFX blow away earnings, only to see the stock prices fall through the floor. Makes you want to skip all the time analyzing stocks and just buy some overpriced KO, DELL or MSFT.

OK, I'm done whining. Let me know about the CC, including management's tone. Thanks, Roy.

RK

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To: Roadkill who wrote (215)7/30/1998 12:18:00 AM
From: Daniel Johnson
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I didn't hear anything in the conference call about TracPhone air-time revenues. Otherwise the conference call was upbeat. KVH is upbeat about useful integration of FOG technology into navigation products. This will very much widen the range of uses for KVH products. Two applications mentioned were tracking and control of trains, and precision guidance of farm machinery. In the case of trains, occasional interruption of GPS signals by bridges and tunnels is a concern that is easily fixed with the addition of a FOG sensor.

With the hope that the FOG-enhanced TacNav product will sell well, I recently bought some KVHI.

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To: Roadkill who wrote (215)7/30/1998 12:25:00 AM
From: robert b furman
   of 6932
 
Hey roadkill you are picking up a following.Not too many get alice to indirectly post to you.I think this little tech stock is fixin to do it their way.The very stable high margin good for sales kind of hard work hustle.Ithink they are a steal!
I'm glad I've got me a bunch!

Bob

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To: Daniel Johnson who wrote (216)8/2/1998 1:44:00 AM
From: Roadkill
   of 6932
 
Glad to hear that the CC was upbeat. I'm still kicking myself for missing it. Gotta find a way not to work all the time.

Anyway, I've been running a few numbers based on the 2Q report, and find this stock underpriced, even considering the issues we're currently facing regarding overhead, margins, etc. The revenue in 2Q '98 was $6.5 MM, giving us a run rate of about $26 MM. I know that this business is a somewhat seasonal, but work with me for a moment. Assuming 7.1 MM shares outstanding, at $3 a share, that's a PSR of about .82 -- and that's without any OEM revenues. If year-to-year revenue growth is even in the neighborhood of 20%, that deserves a PSR of 2 or even 3, just to put us on par with other tech companies with that sort of growth. As you know, the Street will assign an even higher PSR if it thinks the revenue growth is sustainable. A PSR of 2 (based on the 2Q '98 run rate) would give us a stock price in the $7-$7.50 range. A PSR of 3 puts us at about $11.

I'm using PSR, of course, because EPS is difficult here. In the first place, we're losing money over the last few quarters due to the FOG acquisition. Also, it's hard to tell where margins will end up once the overhead is trimmed and the margins in the FOG unit get straightened out. When we do start posting positive EPS numbers again, I suspect that the market will re-notice this stock.

There are other problems, of course, For instance, lack of liquidity. Lately, the daily average has been less than $20,000 worth of stock a day. That's assuming that all trades are registered twice (seller --> MM --> buyer) because we're on the NAZ. Until we become a little more liquid, most mutual funds -- even small cap funds -- won't touch this stock.

Finally, I'm not sure that any analysts still formally follow this company. That's a hassle, but not too much of an impediment. Most analysts have a hard time looking past the next six months, and their "analysis" is often not helpful for that reason. As long as the revenue grows and the products remain strong, who cares if some pointy-head with a spreadsheet raises the projected EPS in year 2002 by a nickel? They're all too busy tripping over themselves to recommend YHOO and AMZN, anyway. Whatever.

OK. Venting complete. Hey, what do you folks think about the market? Short-term correction or beginning of bear market recession?

RK

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