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Watching My Cell Phone Ring

Remember when Ring Tones were the hottest new thing a few years ago? Any stock even associated with the development and deployment of ring tones at least doubled. Recording artists, who's incomes have been slashed thanks to digital music all of sudden discovered a new revenue source- ring tones. Movie stars made recordings of their voices for your ring tone or vmail greeting.

Well, the Pop Culture creative geniuses have come up with the latest and greatest version of the Ringtone, and this is something special.

Want to hear a lot of Techno Babble? How about this dribble:

Vringo's Mobile Video platform combines a downloadable mobile application that works on multiple operating systems and over 400 mobile handsets, a WAP site, which is a simplified website for mobile devices, and a website, together with a robust content integration, management and distribution system. As part of providing a complete end-to-end mobile video platform, Vringo has amassed a library of over 12,000 video clips and ringtones that are provided for users in various territories.

I'm 57 years old, and yes- I have an iPhone, an iPad, use blue tooth in the car, no longer have a fax machine, and text everyone to communicate. However, I understood very little of that when I read it.

However, I talked to some folks, and now I get it. Here's what it boils down to. Let's dumb it down so even I can understand it. It's all about Watching My Cell Phone Ring.
 

A Personalized Video Message: The V-Ring

Ring tones have now officially gone video, and it's all be developed with Israeli technology by Vringo (AMEX: VRNG). We've come a long ways from party lines (I'm sure most of you don't know what that is). I remember dial phones, and I remember my first cell phone being the size of a small brief case.

When you have a customized ring tone in your cell phone it's because you've assigned that ring tone to the contact with your hand set. You can set a ring tone for different callers in your contact list, and that was huge in the stock market a few years ago.

Here's the next generation- pushing the ring tone to the party you're calling. You make them receive the ring tone you want.

But, wait- hold the phone - when you push the ring tone to the receiver of the call, you have a new option. Visualize this: You now either use existing video, or create your own video, and turn it into a Ring Tone. Then, until you change it, that's the ringtone the receiver always hears and sees.

So let's say my daughter wants to create a Video Ring Tone for me. She can shoot a video clip with her phone - then assign that video clip to me when she calls my number. Or, she could use her Skype video to record, transfer the video file to her phone, then assign it to me. Or, she could use some existing video- say a short movie clip, from the library provided. I can't wait to push out some video ring tones with clips of Jack Nicholson.

I'll know it's her calling and I see her video and hear her voice as the ring tone. I'm not Pop Generation, but I think that's pretty cool.

The company behind all this cool stuff is Vringo, Inc (get it V Ringo- Video Ring). Vringo (AMEX: VRNG) trades on the American Stock Exchange, and it's a bargain basement steal right now, especially when you consider Friday's post close announcement.

Let's Cut To the Chase

Vringo trades on the AMEX, and the company came public in June of 2010. From Friday's levels, I believe there could be a lot of money to be made in this stock. Things have changed in a major and dramatic way for the company. On Friday, they officially made the move from a development stage company to one that will commence generating some serious revenues.

If you're wondering why you haven't heard much about this new technology/service, it's because it's not going to be widely available in the US for sometime. Our cellular and Wi-Fi networks are behind other places on the globe. In the second half of the 20th Century, AT&T hard wired the US with copper, and we have been slower to implement the infrastructure for 21st Century communications. President Obama knows that- hence his push for digital infrastructure build out.

VRNG has been focusing all its effort in the Far East, where the networks are far more robust. Specifically India.

There are 750 million cell phone users in the world's second largest country, and VRNG has teamed up with Hungama Digital Media Entertainment to push the video ring tones with the largest aggregator of Bollywood and Southeast Asian entertainment content.

Do you know the Bollywood reference? It's an informal term used to reference India's film industry- all in Hindu, and largely out of Bombay- hence the term Bollywood. It's a huge industry generating billions in annual revenues, and the films are distributed all over the Asia and Africa.

Last year, Hugmana launched India's largest premium, cross platform digital entertainment store.

To sum it up, Hugmana has all the video movie and music content a user could want in India. Hugmana has the relationship with the Cell Carriers to get all that entertainment to the mobile device.

VRNG provides them with the technology to deliver it. It only works when the Cell providers are willing to integrate the technology. Since they can charge a fee for a Video Ring Tone the customer pushes, they love it. It also requires more data use, so that's another cash source. It's a way to generate more revenues from the Cell phone they've put in the customers' hand.

I saved the best for last. This company came public in August of 2010 at $3.60 per share- it was a unit with some warrants that convert close to $4.

The all time low on the stock is $1.40. Friday, it closed at $1.67- way below it's IPO price, and only pennies above it's all time low.

Here's the biggest change and the reason you need to act now: VRNG actually signed this collaborative agreement to offer the Video Ring Tone service with Hugmana in 2009. On Friday, after two years of development, the companies jointly announced the service was officially launched commercially.

It's now available to 500 million India cell phone users who subscribe to 15 different cellular carriers.

This is a major event for the company, and marks the point from which they make the transition from R&D to commercial deployment. I could see the stock shooting from the closing price of $1.67 into the $2 to $2.25 range It's nearly a three bagger if it just goes back to its IPO price.

One day in March this stock traded 770,000 shares, and moved well over $3. However, it was a fool's rally.

This can be tricky business- trading a stock that has been blown out, blown up, and given up for dead. VRNG only trades 20,000 shares a day on average. After 18 months, one would assume everyone who wanted to sell the stock has done so, and only long term investors are still holders.

A complete absence of supply with new demand could cause the stock to gap up rather dramatically. When that's the case, the supply side "wakes up" when it sees the new volume, and you have an inevitable pullback. Sometimes- when there's no supply, you don't have a pullback.

Tough call, but if it does gap up big on Monday morning caution is suggested. I would be reluctant to pick it up above $1.75 to $1.80 in the short term.

Given a little time, I see no reason why this stock couldn't at least trade back to its IPO price. Whether it's Monday or sometime later next week, this stock is likely to trade at its low point for sometime to come.

You have to play the cards you are dealt on Monday morning. A huge gap- say to $2, would cause me to be cautious, and perhaps take a smaller position looking to add later in the day or week.

No gap or a small gap to say $1.75- I'd be all in. Over the next several months I'll be looking for $3.50 to $4 on this one. Short term- perhaps $2.25. SSL- $1.35.

Here's Friday's news release for your review:

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