Comment ---> Stephens Speaks on Kana/Silknet
Stephens speculates Messagemedia is looking toward three acquisitions this year #reply-12626995. Kana, with its high stock price can easily afford a 55% premium. While Stephens is concerned about increased competition from Kana, my concern is the high premium being paid in the industry. Does this raise the bar (higher costs) for Messagemedia in any acquisitions it may be considering?
In comparing Messagemedia's Balance sheet for Q2 #reply-10714307 and Q3 #reply-11705651, it appears Messagemedia picked up about $70 million dollars in goodwill from the Revnet Systems and Decisive Technology acquisitions; ie, ($88,133 - $17,661) x 1000 = $70,472,000. Considering, they are amortizing this at about $12.9 million a quarter, we are in for another four quarters of write-off just for Revnet Systems and Decisive Technology. Which pushes profitability off for another year, in spite of their increasing gross margins (49%).
Now I know the argument for these premiums is rapid growth so Messagemedia can capture market share, but I see some underlying problems to all this. For one, it appears any synergism from the Revnet and Decisive takeovers failed to develop. And two, about the time some momentum comes back into the stock, traders are going to get hit with another boat load of shares coming into the float. |
