Van,
While the picture at NUKO has become more hazy due to their weak balance sheet, much of your arguement is misdirected.
1. Form 144 filings are for letter stock held by former NUKO associated persons. The size of the sales are moderate, and do not reflect the views of the *smart money* within the company. Remember that 50,000 shares were recently purchased by current management/board members at significantly higher prices than we now see. BK has seen his recent share purchases (30,000 @ 7.25 avg.) produce a huge dollar loss ($120,000) on those alone.
2. If management takes a pay cut, it helps ride out the current storm, conserving working capital and creating future longevity for their healthy stake in the company. They are acting in shareholders interest because they are significant shareholders! The staff reductions were in the direct salesforce, which weren't getting the job done in the short term. This has more to do with the slow deployment of broadband technology by the various parties outlined in previous articles posted here. The CSCO salesforce (at least a segment of them) will be a valuable resource going forwards. To deny this would be foolhardy, as they want to dominate the industry. NUKO's proven products are another tool in their quiver to generate sales. These are motivated salespeople, and I expect some contracts to be penned in the next 60 days. This is not a fluff alliance!
3. In any other business, sales would be recognized when they were delivered to the ordering company. Was this such an agressive recognition scheme? It's not like ORCL's recognition upon recieving the PO (remember that fiasco in 1990?). I think the current standard is overly conservative, but what's done is done...
Yes, I am concerned about the weak condition of NUKO's finances, and do expect some share dilution as working capital is raised. But to deny the international demand for their products, the move to higher margin software, and the strong sales alliances seems a little too severe. Risk/reward looks very good to me, but that's what makes markets.
Cheers,
Peter Shaw |
