Bob, if you've researched ANDW and if you have crunched the numbers, you have no doubt observed the following:
1. From fye 1997 to fye 1999, revenues declined 9%
2. Operating income declined 71%
3. Net income declined 72%
4. Cash declined 60%
5. Cash declined another 64% as of Q1 fy 2000
6. Inventory and accounts receivable rose remarkably in the first quarter of fy 2000
7. Shareholder equity has declined from 1997 to 1999, and declined further still in the first quarter of fy 2000
8. Net operating cash flow declined by 52% from 1997 to 1999. It became negative in the first quarter of fy 2000
9. Free cash flow declined by 79% from 1997 to 1999. It, too, became a negative in Q1 fy 2000 (by any test this is a real "whopper" in my book)
10. Gross profit margin declined 22%, Operating profit margin declined 68%, and net profit margin declined 69% (!!!) from 1997 to 1999
11. The company has been a terrible manager of cash during this period (I probably did not need to tell you this) with a flow ratio of 3.4 to 3.8
12. This one will really get you: In 1997, the company was able to put 11.8 cents of pure cash profit to the bottom line for every dollar in revenues. No cigar, but the killer is that by 1999, only 2.7 cents in cash profit was reaching the bottom line. This is a 77% decline. Ouch. And don't be misled by the Q1 report for fy 2000. The amount of pure cash profit reaching the bottom line became a negative 9.2 cents per dollar of revenues. Double ouch.
Now all this happened under the reign of the company's esteemed President and CEO, Floyd English, who was recently kicked upstairs to the position of Chairman of the Board (heaven forbid). And to make matters worse, the Board gave this fellow a bonus of $1 million in 1998 for his outstanding performance! Wisely, they did not repeat this in 1999. Wonder why?
ANDW is a textbook example of how you can take a promising company and literally run it into the ground. The numbers do not lie. They tell the tale. And it happened under the "watchful eye" of the past and current Board of Directors, whose job it is to protect shareholders from such misadventure.
ANDW has missed some absolutely stunning prospects over the past 3 years while the rest of the world was gearing up for the wireless revolution. ANDW talked about it, but did little else. Making coaxial cable is "warm and comfy," and this is what ANDW was content to do while the wireless revolution passed them by.
Will the new CEO be able to salvage this mess and turn things around? Don't know. But in my opinion, he has nowhere to go but up. In fact, one has to wonder how and why the stock price has been supported to the extent it has after one digs into the numbers.
So, now you have the picture from the past scorecards that ANDW has put up. We shareholders don't have a crystal ball, and we certainly don't have an "inside line" to management like some analysts have. We will be the last to know what is really happening.
One consolation: ANDW beat its number by about 3 cents last March. There was a 17% pop in the stock price. Maybe history will repeat itself this March. If you see the price start to move up soon, you'll know that the inside word has leaked out, and you can play the stock. If the stock does not begin to move up, er, uh, well....need I say more?
Good luck! |
