>Before it gets better, there is a good chance that we could see this stock visit $4.<
Well Jack, I'm a bit more optimistic.... it might just be that Doug's disappearance could be what the doctor ordered. Afterall, after 17 months in the job, all he succeeded in doing is to drive the stock price down.
Nelson, in yesterday's interview with NP stated the following:
1. Re-structuring this month that could include jobs cuts and a writedown. Doug, in the conference call, said no cuts, despite falling revenue. If Nelson wants to trim the fat from JBA acquisition further, it may bode well for earnings.
2. Company's financials should improve next 2 quarters because of the re-structuring and because end of year is Geac's strong sales cycle.
3. Still interested in selling all or some of the company. Geac is preparing a data room for a possible aution.
4. John Caldwell is interim president and chief operating officer. Geac is searching for permanent CEO. The job is for Mr. Caldwell to lose at this point.
So, Caldwell is basically replacing Doug Bergeron with presumably back seat micro management from Nelson. I remember Caldwell at CAE 2 years ago when I bought the stock. He was responsible for turning CAE into a earnings powerhouse (30% earnings growth per year). Unfortunately that was the time when investors were in love with high tech and internet stocks and no one paid attention to CAE. Strangely, after he left, the new CEO, Burney (BELL executive) was able to attract investors to CAE by selling off some units, and creating a training division. CAE has more than doubled from $8.50 a year ago. I think Caldwell will be able to turn GAC back to strong profitability, like he did at CAE.
Side notes:
1. Nelson holds 165,000 Geac shares, and 7.9 milliion exercisable options. So, he has a nice stake to see that the stock price go up.
2. Bergeron bought 250,625 shares with a $4.5 million loan from Geac. $2.5 million is forgivable if he is terminated. At $7 today's stock price, the shares are worth $1.5 million. So, he is on hock for $500,000. But not to worry, management has a way of looking after their own. 2 months ago, Bergeron was awarded 500,000 options with exercise price of $8.61 (see today's NP). Stock needs to go up to $9.61, and he'll be in the clear. Meantime, for the disastrous year, he took away salary, bonus, plus benefits in excess of $1 million. Lesson: Life is not fair when you're a shareholder in a company like Geac! |
