No Pain, No Gain: Beam us up Scotty, these shares might just rocket

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The Independent Online

Remember those baffling but happy days at the turn of the millennium when any share with the merest hint of high tech soared into the stratosphere and the Footsie index hit a record 6,950.6 points?

Remember those baffling but happy days at the turn of the millennium when any share with the merest hint of high tech soared into the stratosphere and the Footsie index hit a record 6,950.6 points?

Since then, the investment scene has undergone a dramatic change. Many of those former stars have disappeared, completely burnt out. A few have survived, even prospered. And there is a veritable army of walking wounded, limping along and desperately seeking a role - any role - in these more cautious times.

My share this week is one of those fallen stars. It has, since the collapse of the internet boom, struggled to keep going. But unlike many of its peers it has stuck to its last. And it could, with a little luck, now be dialling the right numbers.

I first came across Motion Media in May 1996. It held a conference at the Old Bank of England pub in London's Fleet Street to display its then revolutionary videophones. At the same time, it sold shares ahead of an Ofex debut. Investors could buy them at the equivalent of 6.75p each; they subsequently brushed 350p. Today's AIM price is a mere 3.5p.

Those early investors who got out at or near the top have fond memories of Motion Media. Anyone daft enough to stay for the ride must be bitterly disillusioned. They have lost a fortune.

I can, however, offer them a little comfort. Although Motion Media - now called Scotty - faces a long, hard slog there is a growing possibility it is on the recovery road. A reverse takeover has breathed new life into the group. The old Motion Media, born out of one of those Government-backed research initiatives that were once so popular, struggled on with its videophones and various spin-off surveillance and care home products. But the vital orders, which would transform prospects, always seemed just out of reach. The few that were clinched did not have enough substance to make much of an impact on a cash strapped balance sheet. And cash-raising exercises failed to turn the tide; the group was deep in the red and had nowhere to go.

Earlier this year, Scotty - an Austrian group in a similar business - came on the line. It had the advantage of being profitable, having concentrated largely on military sales. The subsequent reverse takeover was not without controversy. Motion Media had to go cap in hand to shareholders to raise more cash - at a miserable 4p a share instead of the anticipated 12p. And a founder, who had left the board, managed to muddy the water with a comeback bid.

Board changes, not entirely voluntary, also occurred but now the dust has settled on the upheaval it is possible to get an idea of the enlarged group's prospects. Certainly profits are at last on the horizon, thanks to the Austrian connection. About £1.5m should be possible this year and the share tipster Tom Winnifrith, on his website T1ps.com, thinks £2.5m is likely next year.

Mr Winnifrith, who rates the shares a hold, is not the only expert taking a keen interest in the group. The stockbroker Colin Blackbourn, aka the Black Prince, is so convinced the new group is at last on the right wavelength that he has put together a 4.2 per cent shareholding. This smallcap specialist believes health products, developed by the Motion Media side, are set to collect some quite encouraging orders. Charlie Goodfellow, an analyst at the stockbroker Durlacher, is also making, not for the first time I believe, encouraging noises.

Certainly, the merger has created a much more broadly based and vibrant group. I, too, have followed the old Motion Media and there is little doubt it had some successful boffins but was short of other essential skills that are so vital to any aspiring business. The merger could remedy this deficiency. For the Austrian group - its full name appears to be Scotty Tele-Transport Corporation Radio Video Elektronik - has developed a successful range of products and what's more is pretty good at marketing them. This week it clinched a small Italian order that could lead to bigger things.

With the Austrians now powers in the combined boardroom it is likely that more of the British side's inventive skills will be translated into hard cash. But the shares are a gamble.

Still, back in the days when those videophones were buzzing in that Fleet Street pub - and that was before the internet boom - the risk- reward ratio was even more daunting. Yet the shares enjoyed, for a time, a soaraway existence and fortunes were made. Those days have probably gone forever.

So don't, please, get carried away. Settle for a modest punt with 25p a dream target.

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