Krive, visitor since July 25, a CCI broker.
Joll, visitor since July 25, a CCI broker.
Gicone, visitor since July 21, a CCI broker.
Coincidence?
I like to repost that brilliant message by Lane. Whenever another "broker" shows up, just read message #344, it'll put everything in perspective for you all. Well done, Lane.
<<< I've been browsing through yesterday's posts and feel compelled to inject a few facts and thoughts--.
1. Questions have been raised about CCI's operating history, and in particular its fulfillment arm. We have a couple of "former dealers" claiming that CCI, among other things, didn't deliver the music that their customers had ordered and paid for. The claims from these two "former dealers" who have appeared on this thread may or may not be true. We have an offer from the longs on the thread to do the research necessary to verify these claims, if the "former dealers" provide certain details about their businesses and provide specific legal citations for lawsuits that have allegedly been filed against CCI. So far, the "former dealers" have not provided this information; and no concrete verification of these claims has been obtained.
Nonetheless, a broader question remains: would these claims, even if true, offer a decisive reason to avoid investing in TSIG? Do these claims about CCI's past operating history give us a compelling reason to dismiss TSIG outright as an investment opportunity?
We all have to answer these questions for ourselves. I have chosen to invest in TSIG and to keep my money in the company, even given the possibility that CCI's operating history may have had some black marks. Why have I done this?
A. As has been made abundantly clear on the thread, the SEC filings state that TSIG is in the process of acquiring the assets of CCI, not merging with it. Thus, TSIG will not be legally liable for any past operating failures that CCI may have suffered.
B. TSIG has announced that Valley Media, Inc., will serve as its fulfillment partner. They are the ones who will be delivering the music. For those who may not know, Valley Media has vast resources and is highly respected within the entertainment industry. In fact, Valley Media has won the Wholesale Distributor of the Year Award (formerly known as the One-Stop of the Year Award) from the National Association of Recording Merchandisers for the past five years, 1994 through 1998. I have chosen to interpret this partnership as a sign that TSIG knows what it's doing and is quite serious about ensuring that its fulfillment mechanism is top grade. Past shortcomings in fulfillment do not necessarily, in my mind, predict future operating shortcomings.
C. Mr. Piercy, CEO of CCI, has stated in a public interview that CCI has a customer-retention rate of 90 percent. That suggests a good deal of past success as an operating entity.
Disclaimer: let me make it abundantly clear that I think the questions about CCI's past operating history are still open. I don't mean to suggest either that I believe the allegations that have been made or that I dismiss them outright. I am skeptical of them, because I have doubts about whether this information was provided in good faith (i.e., with my best interests in mind). But I also haven't done the research necessary to verify these claims. My point is that even if I "assume the worst" about CCI's history as a fulfillment partner, I am still willing to invest in TSIG because I think TSIG has established a sound fulfillment strategy by creating the relationship with Valley Media.
2. These same "former dealers" have alleged that Mr. Piercy is a businessman of questionable character, suggesting that any enterprise he is involved in will fail. Again, we have allegations that await independent confirmation but which we, as responsible investors, must take seriously.
The essential "worst-case" scenario that investors must examine is: how would TSIG be affected if Mr. Piercy did indeed turn out to be a businessman of questionable character? I think the long-term effect would be negligible. Why?
A. Mr. Piercy is only one member of a corporate management team that spans across many divisions and many disciplines. It would be hard for any one person to bring the company down because the management team will be held accountable to one another through a system of corporate checks and balances.
B. TSIG is much more than CCI. To be sure, CCI is the poster-child that has brought many of us to TSIG. But the teleservices divisions are also ramping up and seem likely, in my mind, to form the future core of the business. TSIG has identified niche markets for the teleservices divisions (travel, finance) that dwarf the music industry. We're focused today on the online-music play; but the services TSIG proposes to offer these other, much larger markets really make the music business look like small potatoes.
Disclaimer: again, in undertaking this "worst-case" analysis, I don't mean to suggest that I know, or even necessarily believe, that the worst-case scenario is true. I just feel, as an investor, that I must account for this as a possibility and incorporate it into my personal investment calculus. I confess that I am heartened by the fact that CCI has a history as a profitable company and that the company claims publicly that its customer-retention rate is 90 percent. The 8-K also specifies the terms of Mr. Piercy's compensation from TSIG, and this makes it clear that there are real incentives for him to make CCI a successful arm of TSIG. The number of shares he will receive for the assets of CCI are directly tied to the revenues generated through CCI during the upcoming years.
(By the way, for those "former dealers" who complain that Mr. Piercy has hidden his assets so well that they can't collect on their claims, there's hope for you once the TSIG-CCI deal is finalized. It is a matter of public record that Mr. Piercy will be drawing a salary from TSIG for a three-year period. Read the 8-K. This information is freely available in the standard SEC filing.)
3. At least one poster has questioned the business sense TSIG showed by purchasing CCI's assets for $15 million. No offices, no furniture: what's going on here?
What's going on here is simple: access to an existing customer base of 1.5 million people. The Compact Connection brand name and the Music Card come along in the deal . . . but they could have been replicated. TSIG didn't need to acquire CCI's assets in order to get a brand name and an unpatented marketing technique. They did it in order to obtain an existing customer base that is nearly three times larger than CDnow's customer population (569,000) and four times larger than N2K's customer population (352,000). As a point of comparison, it's worth noting that Amazon.com, with a market cap exceeding $6 billion, has a customer base of 3.14 million people, slightly more than twice that of CCI.
In his interview, Mr. Piercy also stated that CCI adds 2,000-3,000 customers per day from its existing operations, so this remains a growing entity.
Some closing thoughts--.
Is this a risky investment? Yes, of course. It should only be undertaken by people with a substantial tolerance of risk, using financial resources that you can afford to lose if this winds up being a bad risk. I can't deny that there's no risk, no potential downside, in TSIG. No responsible investor can make this assumption about any investment; and, of course, it is especially negligent to make an assumption like this about an OTC:BB company that is in its turnaround phase under new management. There's a lot of risk here. I'm willing to assume the risk, at this point, despite the questions that have been raised. I do take these questions seriously, even if I'm skeptical about the motives of the people raising these questions. Any investment involves a process of weighing the negatives. In the notes above, I've shared a little of the process I've gone through in evaluating some negatives. I don't intend for this to serve as investment advice for everyone; I've approached this in a way that makes sense for me personally, given my willingness to take on risk in the hope of realizing large gains. >>> |
