Hi Michael. We apparently look at the situation from opposite angles. As you like to look from the top down, I prefer the bottom up approach with CPU.
The way I plan to catch the turnaround, if there will be one, is to keep visiting the CPU stores and their competition. I make the rounds regularly, and I do so at the same time to get an accurate reflection. My impression of CompUSA here is dismal. I never see any TV ads here (except those numbscull cozone commercials), only the same old Sunday newspaper inserts. With all that cash, how can they justify no TV ads for the stores? Isn't something ass backwards here?
I would not pay book value for this stock from what I see. The book was $3.64/share. 15% of the float is short as of early December. I'll bet you the shorts are checking out the stores.
Granted CPU had $1.28 per share in cash as of the last quarter which makes these few cent losses pale in comparison. IMO, though, it won't take too many revamps, right offs, layoffs, and closings to suck the life out of that strong cash figure. The market is demanding change and change doesn't come cheap. The market isn't impressed by the appearance of Slim either, so apparently his impact is in question.
IMO, this is currently a traders only stock. A news release might pop the price up temporarily, but until there are more customers in the store, the stock trend will probably be down.
Blind faith is a gamble, and as long as you realize that, that's fine. However, current cash in the bank, belief in a management change, and a big investment stake by a foreign investor do not guarantee success. Success will be achieved on the front lines, and that is not happening from what I see. The company will probably have to utilize much of their cash or increase their debt service to turn the current tide.
It's the customer that will guarantee success, and that is easy to monitor - for me anyway. When I see substantial improvement in the stores, I would gladly long this stock. That's why I keep watching and waiting for the excitement to filter down to the customer. I keep waiting for management to do something that stimulates customer activity, but that NEVER transpires. |
