Mike - My impression from the conference call was that feeling OK
with equalling or beating last year was with respect to $.13, not
$.18. There is no reason to expect the current quarter to be much
better than last since the sales campaign will not be until later
this month (and he certainly would have said that the current quarter
was going better if it was)- and it might be worse, depending on the
expense of the marketing campaign. Therefore, I think that $.18 is
possible, but unlikely. Also, the earnings are untaxed. Why should a
company making $.10 on an aftertax adjusted basis, with problematical
growth sell for more than $2? It shouldn't, except for takeover
speculation or a technical bounce. (I still think it is an attractive
takeover, but I will not own a stock where that is the primary investment
feature.)
I would add that the stock got to $11 when forecasts were in the
$.60 range, and stayed above $5 when they were close to $.40. The
company has disappointed 3 quarters in a row! I spoke to CFO last
August and he said they were very optimistic about the current fiscal
year. It is very hard not to draw the conclusion that either their
business is very volatile and now in a flat to down trend, or that
mgmt is not particularly competent. They have clearly failed to bring
the European helpdesk business success (that they bought) to US - and
I wouldn't be surprised if US players enter their markets there.
Furthermore, the firm that I bought this through has repeatedly been
surprised by the company's results. This raises the issue of how
forthright the company has been when contacted by an analyst for an
update. (I was told a week before the latest disaster that the investment
firm was highly confident that they would make $.07 for the quarter
just reported.)
For these reasons I have decided that, although I think a technical
bounce and a takeover are likely, that they are not sufficient reasons
not to take a very large tax loss, to offset some better results elsewhere.
Goodbye and good luck. |
