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 The key to no keyboard
Zi Corp. (ZICA-NASDAQ), a company Taipan recommended in late 1999, which has gained over 75 percent to date, has the solution for the keyboard problem. Zi has developed an interface that allows the Chinese language to be input into a phone, PC, set top box or what-have-you using an 8-key input device similar to a TV clicker.
Chick clicks
The thing you might not know is that Zi's Chinese language interface has been adapted to Latin based models and is going to be put out by France's Alcatel (ALA) sometime next year. Could this signal the end to the "qwerty" input device now in vogue? Probably not, but with a market cap of only US$250 million, I'm willing to wait around and find out.
Zi Corp just might be the high flyer of the year for 2000.
ZICA is up 60 % in two months and is hitting new licensing
agreements at a pace of two a week. And many are big-name
companies. The last conference call was conservatively positive.
Zi has plenty of deals (16) with plenty of names but has
yet to produce any real numbers--beyond stating that the
deals usually include up-front fees and revenues between
US$0.25 and US$1.25 per phone.
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Agreements and revenue streams
Konka will start selling Zi-based phones by the end of 1999 or the beginning of 2000.
Sichuan will deliver 200,000 Zi-based settop boxes by the end of 1999 and 200,000 each quarter thereafter.
Eastcom will integrate Zi in all of its new phones with 10 new models coming out each year. Shanghai General is building a Zi-based Karaoke machine. I had a nightmare about Connie Chung and one of these machines the other night. I'm not sure if that's a bad omen.
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The Ministry of Education in China is setting policy concerning
Zi software for use in Shanghai General & Sichuan settop
boxes. There are 70 million cable subscribers and China
plans to connect all major cities by the end of 1999. As
most of you know, there are more cable users in China than
hard-line telephone users.
The numbers
The Q3 report should be out by the end of November. Only 60 days of phone sales by Ericsson (ERICY-ADR-NASDAQ) will be reported. Furthermore, Ericsson has a 400,000 phone per month limiting quota imposed by the Chinese government. There is upside. If these numbers are good and we see a few analysts jump on the bandwagon, we could move a lot higher real fast.
The downside risk is some sort of dilution of shares. The company says they have no immediate need for capital, but it wouldn't surprise me if share prices rise to the mid-teens. And remember, Zi remains a Canadian company dependent on sales to China--even if it has a NASDAQ listing.
I told you it wasn't a scam
This speculative stock is slowly turning into a real company. The company anticipates an Original Equipment Manufacturer ramp up. Zi will be in 10-12 platforms by the end of 1999, 15 platforms by April 2000 and 30 platforms by the end of 2000.
The revenue will come from four streams: license fees, engineering fees, royalties, and maintenance fees. In addition, by Q1 2000, a new revenue stream from the OZ acquisition will come alive. I expect earnings early next year and a ramp-up toward the fall.
Unforeseen disasters aside--Zi could be a year 2000 best performer. It stands at the convergence of the wireless, cable and Internet worlds. And, lo and behold, we are well positioned to ride the next wave of hype as we got in at the unbelievable discounted price of US$7.50.
Please read on...
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