The report which I received in the mail recently mentioned the
loss of one major customer, showed a loss for the quarter in
line with the decrease in revenue, and stated that the next
quarter would look pretty much the same. That's information.
Just not the kind we wanted to hear. People keep thinking, or at
least hoping, that there is some kind of good news which the
company is keeping secret for some inscrutable nefarious reason,
to the disadvantage of the stock price and the individual investors.
How likely is it that the company is really withholding good news
to deliberately keep the price in the toilet, with some kind of objective of buying back the stock on the cheap? Given that they
just got out of a lawsuit, and that they have to report real numbers
in their quarterly reports anyway, I consider this unlikely.
So what are the possible courses for this company?
(1) They do nothing different, don't get any new big customers,
and continue to lose money every quarter for the next couple
of years until the cash is burned up and then they go under.
(2) They take action when it appears that they aren't having
success in getting any new big customers, ditch the presumably
money-losing operation in India, and otherwise cut costs so
that they are at least breaking even and then continue in this
way indefinitely.
(3) They wait out the current lull, which is I think due to
companies waiting until after the Y2K problem is behind them
before starting any new projects, at which point they do get
some big projects and/or new large customers. Perhaps they
even benefit from pent-up demand.
(4) They get lucky and get more customers in the next months,
and then continue to grow next year.
So if they never get a new customer AND they don't cut costs,
then in a few years our stock goes from the toilet into the
sewer system. But what are the chances that they _never_ get a
new customer?
I assume that they're doing the best they can to drum up some
business. This company was a Y2K play for many IPO investors,
but in reality, the IPO came too late for that. Any big Y2K
projects needed to be well under way long before 1998, and most
of the big banks have been at work on them since the early 1990's.
Some investors were (I presume) thinking that as the deadline
approached, a bunch of companies caught napping would suddenly
wake up in a panic and pay huge bucks to have their fat pulled
out of the fire at the last minute. Wishful thinking. There
apparently weren't that many dumb _big_ companies, of the size
where Command could obtain a contract for a large project. The
small and medium-sized companies, of which some may indeed have
been too complacent, don't have the bucks to be good milk cows.
I can easily imagine some urgent and profitable work being required
after the year-end for companies where something actually does
go wrong in an unforseen manner. Who knows, some liability insurance
companies may even end up footing the bills.
Perhaps Command could get a contract with an insurance company
not to fix that company's systems, but rather to check out the
systems of the customers who are insured by that company as a
preventative measure to avoid paying out losses. |
