Zoo Digital Technology with a market set to grow strongly

The reason for the weakness is that they tucked away a profit warning, a real possibility for failure to breakeven and the need for fundraising in the Interims.

The profit warning is the simplest, the 2005-6 estimate was £2.5m, that has now been downgraded to "On track to reach Group profitability"

The failure to breakeven is in a couple of parts:
*The use of "on track" alone is a warning sign, companies usually say "confident".
*Zoo are far from finished pouring money into Zootech, they say in the Interims,"The second element of the hub is a project that encompasses an automated authoring system to allow efficient production of film titles across multiple platforms and formats, including DVD-Video, UMD (used by Playstation Portable), HD DVD, Blu-ray Disc and some 'on demand' formats".
*Zoo is putting a lot of hopes for breakeven in their publishing division yet at the same time say ZOO remains conservative in its outlook for sales during the second half given the current uncertainties in the retail market."
*No mention is made at all for Hothouse, another major money drain and with no sign of income from 3rd party development projects.
*They are putting a lot of faith in DVD projects not only being agreed but also paid in the next 25 weeks, "There is also an expectation that further opportunities with regard to DVD production will be realised over the second half of the year and therefore ZOO expects thatthe Group as a whole will reach profitability in this financial year.

Zoo looks to have been a tad naughty in putting income from xmas iDVD's into their debtors. As its turned out that is probably ok but it distorts the forward picture as tthat income wont be available in the second half. The reason they had to do it is that in 25 weeks they have burnt through £3 million fundraising, £1 million overdraft and still made a £2 million loss.
Thats £6 million in 25 weeks which is a heck of a cashburn.

No interest at the moment, only observations although would love a spike, but with the figures underpinning the company, its a bit difficult to see one now the xmas iDVD euphoria is over. One thing is clear though, the company badly needs to release some very very good news.