RE: Sensar becomes Net2Wireless.

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From: Adam Rifkin -4K (
Date: Sun Jan 09 2000 - 07:24:59 PST

I wrote:
> [By the way, the whole concept of "reverse merger" is a weird one, as
> pointed out by the second article below. It could be as innocuous as
> not wanting to do IPO road shows, or as insidious as having something
> significant to hide, and investors will not know if it's one or the
> other until after the stock has risen 1000% or dropped 90%... or both...]

Mark responded:
> I'd be happy to learn of counterexamples, but so far every time I've seen a
> reverse merger into a shell corporation, it's been someone with something
> significant to hide.

I see your point, though there are two examples from last year that I
can think of. The first was Interleaf, which as far as I can tell had
died after years of glory years ago... until "the e-content Company" --
an XML content management tools company, see
-- crept into the shell of Interleaf last year. This in effect sent
LEAF's stock up 20 times in value last year as investors perceived
something good in the e-content Company.

The other example was a weird company called Scandinavia, which up until
last year was a -- get this -- Canary Island hotel and real estate
holding company based in the Cayman Islands, which traded on the Amex.
Last April a company called Mirror Image Internet -- see -- crept into that shell. It gets better.
The company changes its name to, and proceeds to strike
deals with Microsoft, Oracle, Inktomi, Hewlett Packard, and EMC. When
last I checked, XLA's stock had split 3 times in 6 months and is up
roughly 150 times where it was a year ago.

Now, whether "the new Interleaf" and "the new Xcelera" are legitimate
businesses remains to be seen. Heck, Xcelera is still based in the

But I guess the "granddaddy of all reverse merger stories" is CMGI,
which was a maintainer of direct marketing mailing lists for college
textbooks when the BookLink browser crew crept into the company. A few
months later they sold BookLink to AOL for $30 million in 1994 AOL
stock; by the time they sold they had $70 million in cash which they
used to buy Lycos and GeoCities, plus start Engage. Numerous
acquisitions and spinoffs later, in 2000 they are now worth $34 billion.
At least, on paper they are. Still, that's a far cry from their IPO in
1994 at $10 million. They parlayed the "shell game" into the
top-performing stock of the last five years, though I hear Xcelera is
gaining ground fast...


Comparisons of present-day Internet Capital Group and General Motors...

ICGE GM Market Cap $45B $47B Price/Earnings 10,220 7.6 Price/Sales 2041 .28 Price/Book 105 2.9 Price/Cash Flow 673 2.6 Dividend Yield 0% 2.67% Employees 35 594,000


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