AMPX Ampex Corp Class A (MM)

Dutton Associates updates its coverage of Ampex Corporation (Nasdaq:AMPX) reducing its rating to Neutral. The 12-page report by Dutton senior analyst Richard W. West, CFA is available at http://www.jmdutton.com/research/AEXCA/index.html, and from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals. The overriding events impacting Ampex�s market valuation relate to the negotiations between Hillside Capital Incorporated (Hillside) and Ampex resulting from the November extension of the standstill agreement and then the January termination of the extended standstill agreement. Now that the extension has been terminated, Hillside has reasserted its allegation, previously disputed by Ampex, that Ampex has breached its obligations under the Hillside/Ampex-Sherborne Agreement, dated December 1994. The current status is that if Ampex fails to pay $2.7 million of principal and interest payments currently due, or to cure the alleged breach, Hillside will be entitled to accelerate repayment of all outstanding Hillside Notes and accrued interest, which totaled $48.7 million at December 31, 2007. Any acceleration by Hillside would allow holders of the $6.7 million Senior Notes to accelerate the maturity of those obligations. The acceleration of these debts could require Ampex to seek protection under federal bankruptcy laws. The situation between Hillside and Ampex is unresolved. Due to the real possibility of federal bankruptcy, we are reluctantly lowering our rating to Neutral. Ampex reported 3Q results where on an operating basis, 3Q was positive with increased revenue and increased operating profits from the recorder segment. Ampex revenue from running royalties was $9.8 million for the 2007 nine-months compared with $7.4 million for the nine-months ended September 2006. The increase in running royalties on camcorders for 2007 resulted from royalties paid by Sony Corporation on their digital camcorder sales subject to an agreement, which commenced in April 2006. About Dutton Associates Dutton Associates is one of the largest independent investment research firms in the U.S. Its 30 analysts, primarily CFAs, have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its institutional-quality research, estimates, and ratings are carried in all the major databases serving institutions and online investors. The cost of enrolment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $95,000 from the Company for 10 Research Reports with coverage commencing on 10/12/2004. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.