In the CC, they said they bought back 350,000 shares of ASPT at $4.2 Million during Q4.
In other words, they paid an average cost of $12 per share for their own stock, which indicates that ASPT values its own shares at $12 or more...
Safe Harbor rules pertaining to share buybacks would permit the company to continue buying back shares several days after an earnings announcement. At current price levels, it would seem likely that the company would be eager to continue buying shares for their ongoing employee stock option plans.
Note that shares bought back become Treasury Stock, where they can be re-issued or used for employee stock options.
As ASPT has beefed up its sales force in the last 2 quarters, one of the best ways to motivate sales staff to outperform is by offering rewarding stock option packages. With shares at near book-value, ASPT fortunately isn't having to pay top dollar for those shares.
Contrary to common belief, the $4.2 Million "expense" to buy back shares does not appear on the Income Statement. Even though the $4.2 Million could be thought by some to have cost 8 cents per share of expenses against the bottom line, it is essentially a balance sheet transaction.
Given the .COM meltdown this year in April (where many of ASPT's prospective customers seemed to be at the time), I'm actually rather pleasantly surprised that ASPT continues to close substantial deals for their "Contact Server" (CRM Portal) software. So, in spite of the .COM meltdown, there continues to be a growing market for eCRM with paying customers!
And, regarding lower guidance for Q1, historically, ASPT's Q1 revenues usually decline from Q4's revenues because of year-end spending by customers. It is not much of a surprise for ASPT to provide Q1 revenue guidance of $150-$153 Million, versus this Q4's record revenues of $158.4 Million.
This was also our first chance to observe the new CFO, Betsy Rafael in action. She was formerly CFO at Silicon Graphics and worked at Sun, Apple, and Ernst & Young.
As Beatriz said, something to the effect of, "She has brought laser focus to our financial organization." I must agree, she sounded quite competent on the CC. In fact, it seems Beatriz must have a lot of confidence in her because she let Betsy Rafael handle most of the conference call. Betsy seems to be an activist CFO in that she wants to take on additional initiatives to enhance the company's position such as:
1) Evaluating the restructuring of the financing of the new headquarters building once it is completed. This activity alone "could generate significant cash flow."
2) Improving ASPT's financial presentation to allow a better understanding of the value in ASPT [to the financial community] and provide better comparison with other software companies.
The latter is such an important issue because ASPT should be compared to the KANA's and EGAN's and QNTS's of the world on a valuation basis so that the financial community begins to recognize ASPT.
Keith (KHS), I'm not convinced last caller was an analyst, but clearly she didn't have an appreciation for how difficult a market this has been for many players and how ASPT needs to optimally manage their growth velocity. Part of gaining market share in a nascent eCRM market involves hiring sales staff. Doing so isn't frivolous spending. |
