I was planning to post Katie’s response to my response (and my response to that), along with several of your other good comments. But then I noticed this press release from a Borealis subsidiary . . . so let’s take a breather from politics (and from correcting my French) and talk once more about THE STOCK THAT IS SURELY GOING TO ZERO.
Long-time readers will know I have been suggesting this wildly speculative stock for five years, starting at around $3.50 a share . . . and that it not only weathered the high-tech crash, it has, preposterously, doubled. But closing at $7.25 last night, the whole company was still valued at under $40 million (5 million slices of the pie at $7.25 each), and I have a friend with a private jet worth more than $40 million. So . . . well, first read the press release and then meet me down below:
FOR IMMEDIATE RELEASE
BOEING PARTNERS WITH CHORUS MOTORS FOR DEMONSTRATION OF ON-BOARD ELECTRIC DRIVE FOR COMMERCIAL AIRCRAFT
Gibraltar, 8 November 2004 — Boeing Phantom Works, the aerospace company’s advanced research and development unit, has selected Chorus Motors plc to design, build, and operate a system that should eliminate the use of airport tow tugs and jet engines to move most commercial aircraft on the ground at airports.
The use of on-board electric-drive motors would enable pilots to be in complete control of their aircraft from gate to gate. Chorus’ Meshcon™ motor and drive technology delivers unprecedented overload power density, which is ideal for this application.
Benefits from on-board electric drive include faster flight turnarounds and increased fuel efficiency per trip, as well as reduced aircraft noise and emissions. It is envisioned that this solution would be applicable to both passenger and cargo aircraft.
About Chorus Motors
Chorus Motors plc (US OTC: CHOMF) is a majority-owned subsidiary of Borealis Exploration Limited (US OTC: BOREF). Chorus has developed the proprietary Chorus® Star™ and Chorus® Meshcon™ electric motor technologies, which offer substantial performance improvements over comparable motor and drive systems. The Chorus systems produce high torque at start-up speeds and are ideal for traction applications such as automobiles, trucks, locomotives, and ships. Their advantages enable several potentially innovative applications in aircraft. For more information, see www.chorusmotors.gi.
With a heritage that mirrors the first 100 years of flight, Boeing is the world’s leading aerospace company and a top U.S. exporter in terms of sales. Providing products and services to customers in 145 countries, Boeing is a global market leader in commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services. Boeing Phantom Works, the company’s advanced research and development unit, works with the company’s major business units to help determine their technology needs and collaborates with universities, research agencies and other technology companies worldwide to meet those needs.
Andy is a sometime financial writer who has been unable to resist acquiring a ridiculous number of shares of this stock over the years, and who is now almost allowing himself to hope his ship is coming in, and that he will finally be able to afford a flat screen TV.
For further information please contact:
Chorus Motors plc
Dr. Robert Carman
Program Manager for Aerospace Applications
Tel: +1 805-496-2973
Cell: +1 805-908-1762
OK, that last little bit about me was not in the press release. But consider what this means (assuming some phantom at Boeing will actually confirm any of this):
1. This is the second or third time Boeing has allowed its name to be used in a Borealis press release. I don’t think they would do this lightly. And I think they know a thing or two about technology, because not more than three hours ago I was hurtling through the upper reaches of the atmosphere at 600 miles an hour sipping coffee and reading a magazine. And I don’t think I could have been doing that if they didn’t have a little technical expertise.
2. So before we get to the specifics of this press release, one might conclude from this that Borealis, as a company, may actually be real, and that its Chorus Motor technology may actually be something at least vaguely along the lines of what its parent company, Borealis, says it is. Which then leads one to imagine that there is at least a chance the astonishing claims for its three or four other subsidiaries might have some merit.
3. As suggested in an earlier column (use the SEARCH feature at lower left if you’re interested in finding previous columns), what Borealis is worth is a function of at least two wild guesses:
- First, the chance that this stuff is real and commercially viable – which years ago one might have put at 1% but now, with this press release, one might put at . . . what? 50%?
- Second, the value of this stuff if it is real – which one could surely put at $300 million for each of the four or five subsidiaries (and which the company, based on its wildly optimistic projections, would put much, much higher). So, bearing in mind that a 50% chance of success carries with it, as the half-fullness of a glass carries the unshakeable burden of half-emptiness, a 50% chance YOU WILL LOSE ALL YOUR MONEY . . . the student of mathematics would multiply the hoped for value ($1.5 billion) by the possibility of success (50%) and gets a risk-adjusted value of $750 million.
Of course, if the company is “worth” $750 million, it might only really get interesting if you could buy it for a third what it’s worth – $250 million. With room to triple over a few years if it really were worth $750 million . . . and room to double again if the 50% chance we’ve assigned its being real turned out to be 100% . . . and to then multiply some more if it turns out that each of these subsidiaries is worth even more than $300 million.
But – stressing with all the sincerity I can muster that these are just wild guesses I have pulled out of the air (garbage in/garbage out) – even at $250 million, that works out to $50 a share ($50 x 5 million shares) . . . and the stock closed last night at $7. And most of you paid $3 or $4, as did I.
Have I mentioned that this is risky? And is it not evident that, just as I was horribly wrong in predicting the outcome of last week’s election, I could be the victim of similar wishful thinking here? Indeed, that in my weakened emotional state following Tuesday’s tragic outcome, I could be grasping at straws?
All true. But now let’s go back to the press release. It seems to be saying that jets could just drive themselves around the airport like golf carts. That could save on the labor of towing them out of their gates, but more important, I’m guessing it could save a lot of jet fuel. Many is the time I’ve been on the tarmac, engines whining, for half an hour or more before taking off.
One of you will do the numbers for us, but I’m guessing a deal like this could save $100 a day on fuel (and the less fuel you need to carry, the less the plane weighs and the less you need to fly it), plus some more on labor . . . so maybe $40,000 a year per plane?
So what if the Borealis subsidiary could make a license fee of $5,000 a year per plane, leaving a $35,000 a year saving for the airlines. There are something like 10,000 commercial jets, I think. That’s $50 million a year.
I know at least a few of you are being driven to distraction by this kind of wild thinking. So many things could go wrong! And my estimates could be so far off!
But Boeing seems to think this is worth pursuing.
And if it works for planes, could it work in some way for elevators? For forklifts? For electric golf carts or electric cars?
And if this Borealis subsidiary actually proves to have value, might the others?
It still seems way too good to be true. And there are so many weird things about the company (headquartered in Gibraltar, not subject to S.E.C. regulation) one’s head spins. You must never invest more in this speculation than you can truly afford to lose.
But who knows? Maybe Boeing knows what it’s doing.
Quote of the Day
It was never my thinking that made me my money. It was my sitting.~Jesse Livermore
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