I'm trying to compare EA's latest results to analyst expectations.
Here is the only analyst report that I have:
NEW YORK--(BUSINESS WIRE)--Dec. 9, 1997--S&P analyst Mark
Arbeter has initiated coverage of EA Industries with a 4 STAR,
accumulate rating.
Arbeter sees big potential from this underfollowed contract
manufacturer. The company is in the midst of a dramatic turnaround,
spearheaded by new CEO and president, Frank Brandenberg. EA has
sold money-losing non-core assets, consolidated its operations,
slashed management layers, cut factory expenses and strengthened its
sales staff, all over the last 7 months. A completely new board of
directors was brought in and consists of executives from Lockheed
Martin, 3Com, Seagate Technology, and Xerox. Besides the potential
for internal growth, the company plans to acquire highly profitable
quickturn/prototype facilities geographically dispersed near EA's
customers, which will add to '98 revenues and improve margins quite
a bit. Arbeter sees a 22% sequential jump in 4th quarter sales and
a Q4 loss of $0.06 a share vs. a 3rd quarter loss of $0.17. He is
conservatively estimating '98 EPS at $0.23 on a 46% jump in sales.
CONTACT: Standard & Poor's, New York
Mark Arbeter, 212/208-8955
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My comment:
As it turned out, the 4th quarter had a loss of $0.74, vs. Arbeter's estimate of a loss of $0.06. I'm not sure how these two numbers really compare, though, since I'm not clear on which quarter some of the charges were made. Some of the charges are not for operations, and shouldn't really be included in comparing to analyst estimates.
In any case, Arbeter ought to scrap his 'conservative' projection of a profit in 1998. Here's what the Arthur Anderson had to say in the 10k:
<<As discussed in Note 2 to the
financial statements, the Company has incurred significant losses in each of the
last three years, a significant portion of the Company's convertible notes and
debentures are currently payable on demand, and, at December 31, 1997, the
Company had negative working capital and a shareholders' deficit. In addition,
the Company had negative cash flows from operations in each of the last three
years. The Company's financial projections indicate that operating losses and
negative cash flows will continue into 1998 and that the Company will be in
violation of the covenant under its primary loan facility to maintain a required
minimum net worth. These conditions, among others, raise substantial doubt about
the Company's ability to continue as a going concern.>> |
