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November 16, 2006

Handheld Entertainment Pulls a Google

posted by MR WAVETHEORY at 11/16/2006 12:55:00 AM
Meet the ZVUE 200. Its a distant cousin of the iPod.

Handheld Entertainment Inc. (Nasdaq ZVUE) wins the most speculative stock award for today. The company makes Personal Video Players - basically iPods videos- and it zoomed up 303% today because it bought a video website called dork.com and announced it would turn cash flow positive. The stock traded at $1.67 in the morning and by the close of business it had completely ignored the laws of gravity and reached $6.10. In the meantime, the float had turned over twice and everyone had made a bundle.

Is Handheld Entertainment trying to pull a Google? I think so. Is it a mini Google? Probably not.

For starters, Carl Page, the CTO of the company, is the brother of Larry Page of Google (Nasdaq GOOG) fame, so maybe there is a bit of Googleness in ZVUE. Just like his kid brother Larry, Carl purchased a video site, but that is where the similarities fall apart. One small difference: Handheld paid $1.5 million for dork.com while Google paid $1.65 billion for youtube.com. Another difference: Handheld zoomed up 303% the day after the announcement. In comparison, Google barely budged.

Handheld may be trying to copy Google, but it's hardly the same business. Handheld Entertainment is a hardware company. They sell $99 video players through Walmart that compete with the iPod. It's an interesting device but there's just one small problem - it comes with just 128MB of memory. ZVUE was even planning to do an iPod knockoff, but I think they realized in good time that competing against Apple is quite a tough calling in life, so they shelved their plans for releasing an MP3 player.

Handheld seems very speculative and that's why it wins the honor of being the most speculative stock of today. With 303% returns, who needs venture capital anymore? Don't even mention private equity. Is this a speculator's market or what?!

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2 Comments:

Anonymous David Politis said...

Dear Mr. WaveTheory:

First off, thanks for writing about HandHeld Entertainment.

So you know, the company HandHeld acquired is Dorks.com, not dork.com as you wrote in your blog post. (Thought you'd want to know.)

HandHeld is building what it terms a "complete portable video ecosystem" and it has chosen to not compete head-to-head with companies like Apple and Microsoft selling portable video players priced at $249 and above, but to rather sell its own value/priced PVPs at under $100.

Additionally, HandHeld has chosen to "open" its video store so it works with any other portable video player or device (such as cell phones, smartphones and PDAs) that use Windows Media Player 10. This is why (in part) why HandHeld has a partnership with RCA/Thomson for the LYRA X3030.

I won't go on, but if you or your readers are interested in more about why HandHeld (NASDAQ: ZVUE, ZVUEW) was up 300% percent yesterday on volume 100X above previous volume, you might find yesterday's news release interesting that summarizes the company's first investor conference call. You can find this at http://www.hheld.com/news/20061115.php.

Sincerely,

David Politis, for...
HandHeld Entertainment

P.S. Yes, I head-up the PR agency that handles publicity for HandHeld Entertainment.

11:41 AM  
Anonymous Anonymous said...

The ZVUE comes with 128MB of memory in an SD card, but you can put any size SD card in it you want. Unlike devicess with built-in memory, the ZVUE will continue to grow as SD cards grow.

When ZVUE shipped, 16MB cards were typical, and it wasn't a very interesting player. But then the card sizes started doubling ... At half a GB it becomes very intereting. SD cards are up to 4GB now, which is a lot of video or MP3. It's a nice player...

9:05 PM  

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