Shares in UK start-up company Jyra Research Inc were in sharp decline yesterday for the third day in a row, bringing the company’s market capitalization down to just over $100m; which is still quite high for a company with second quarter revenues of less than $250,000. We contacted Jyra to find out why the stock declined so much, what made it rise so much in the first place and what is so special about its Java-based network monitoring tools. While the Hertfordshire, UK-based company was pleased to talk about the latter, it was extremely indignant about the former. We understand a number of investors are shorting the stock – the practice of borrowing shares from your broker and selling at a high price betting that the share price will fall so you can buy them back at a much lower price, pay back the broker and pocket the profit. That would seem to be the case as the shares stabilized by late morning yesterday, before closing down $6.75, or 28.1% at $17.25. We also hear the stories about the company being ripe for acquisition, with Cisco Systems Inc the main suitor, although Microsoft Corp has been mentioned in other reports. Some of the key management are ex-Cisco. However, president and chief executive Paul Robinson said the company has no plans to be acquired.
Dutch investment newsletter
The company, which has a sales office in San Jose was not best pleased with the coverage it has been receiving this week. Yesterday we reported on recommendations made in a Dutch investment newsletter called Financial Strategie published by someone called Rienk Kamer, who was strongly recommending the stock, which he also holds. Sources told us he was also part of two of the institutional investors, which Jyra did not deny but said it is out in the open in the company’s Securities and Exchange Commission (SEC) filings, although we couldn’t find Kamer’s name mentioned. Jyra’s product, Systems Management Architecture (SMA) is a set of Java-based network monitoring tools. It is currently on version 1; version 2 will go into beta September 8, be shown to a small number of preferred customers around September 22 and launched formally in London three days later. The company will be promoting two major customers at the launch: Cap Gemini Sogeti and another unnamed company, which we understand to be British Telecommunications Plc. The advantage of using Java, says Robinson, is two-fold. It aids scalability because of its multi-platform capabilities and means that network monitoring can be shared across more computers that monitoring software that’s restricted to just a couple of platforms. The second advantage Java brings the ability to use applets to do some of the analysis of network information remotely on site, thus saving bandwidth. Jyra says normal practice is to use Simple Network Management Protocol (SNMP) to get back network information – a router can return as much as 2Mb in each file. Often 20% of network traffic is taken up with the information analyzing the network itself, says Robinson. Jyra uses Java’ Remote Method Invocation (RMI), which uses less bandwidth and small Java applets to go off and do some of the analysis on site, only sending back the essential data to the network administrator, resulting in files only a few kilobytes in size. The version one product was based on version 1.0 of the Java Developer’s Kit (JDK), version 2 will use JDK 1.1, which Robinson said is the first release with any true security features. The next version of the JDK is expected to feature some secure sockets layer security.
Evaluating its listing options
Jyra has 27 staff in the UK, where all its development is done. It employs two in San Jose where it plans to hire five more. The company is evaluating its listing options, having received its S1 registration from SEC on July 31. At present the shares are traded on the Over The Counter (OTC) market, having been floated back in September last year under Rule 504, which enables companies to go public providing they raise $1m or less. The company initial placement of 1 million shares in Europe raised $3m back in November, Some of those investors are among those who registered in August to sell a total of 1,043,100. The institutions are mostly European, drawn from France Germany and the Netherlands. Jyra, or at least Archie Adams, the investor relations director was under the impression we were inferring some grand Dutch conspiracy by asking why so many Dutch institutions had invested in a UK company bringing up the issue of Kamer in the same conversation, which we were not. However, we did think it a little disingenuous of Kamer to talk up a stock that he was also selling without declaring his interest in Jyra in his newsletter, which has no connection with Jyra. Two Dutch financial newspapers, including Het Financieele Dagblad also carried the story after we’d published, so they thought it odd too. We have been unable to contact Kamer thus far.
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