intellectual property, page-26

Morley,

I appreciate your views, so please keep them coming. I'm always for open discussions on stocks. I'm sure most investors in ETC appreciate what you bring to the forum too. As I've always said in the past, we have to take on board the positives and negatives and base decisions on the back of facts.

A few things I would like to touch on......

Ouisia did a good piece of forensic work. He or she probably paid for copies of the register to help clear up the notion that a single seller has been dumping stock. Good work Ouisia. At least that part has been cleared now.

Secondly, I would like to touch on margins. There is a lot of talk about margins and IP.

What ETC is doing at this point in time is selling a solution to different entities. They are using existing technology to sell a cost effective solution to clients who need them. This is how I see it. This is similar to what a lot of I.T. companies are doing in the market place. I'm sure IBM will be using existing technology to tailor specific solutions for their clients. This is the same thing that ETC is doing. Most I.T. companies focus on providing cost effective solutions to their clients' problems. If you believe you have a great cost effective solution, you might want to try and protect it via patents.

As for the patents itself, I am not a legal expert, so I shall not comment. Probably a good question to ask Mgmt.

Margins...... Take IRESS for example. That is a software company which provides the trading screens for investors/ brokers. They have an expected revenue of approx. $168-$170mil for FY'09. Their expected NPAT is around $50mil. I know this is very rough, but that equates to an NPAT margin of approx. 30%. IRESS is trading on a P/E multiple of 19x. Is that normal? What is a normal NPAT margin for a company like ETC? What is a normal P/E multiple for a company like ETC? I know the margins for ETC are higher, but the market is definitely not factoring potential earnings into the stock right now.

I believe the market just wants to see the ETC story validated and since it is so close to reporting season, I would expect the company to come out with a downgrade if they believe earnings are going to be materially different from their guidance.

At these levels, the market is pricing in non-performance of some contracts. I know shareholders would like an update now. Maybe we will get one from the EGM on Monday. However, we are about 2.5 weeks away from their report, so i'll be patient for the time being.

I repeat, a good catalyst for ETC is to initiate capital management in the form of a buy-back and/or dividends.


Happy investing.