Austin...
What happened to the other 3 "reasons to own" MSGI? <ggg>
As a previous trader/shareholder in this now very dubious business, I've got to tell you, the management practices here are questionable at best.
In the spirit of fairness to anyone who might read your post and consider an investment in this company, I'll offer this pretty comprehensive reply to the post you just linked...
Quite frankly, in my opinion, the way management has bilked the private shareholder towards their own self serving ends of wretched excess is a disgrace to any public company. I actually was fool enough to give this company the benefit of the doubt.
My disclaimer, I made money intermediate and swing trading the stock. But during my research really studying this company trying to justify a long position, I found the deal just doesn't wash.
Absolutely no credibility here...none, nada. I could actually see the possibility of a reverse split just to keep it listed if this company doesn't get it together real soon.
Here's the reply, and it's just the tip of the proverbial iceberg...enjoy.
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By: buddyboy
Reply To: 28353 by GreatG $$$ Thursday, 19 Oct 2000 at 11:56 AM EDT
Post # of 28403
Great G I want to be addressing your points.
MSGI....
1. has highly recurring revenues of $225 - $240 million;
I never see this revenue figure any where. How can you call these numbers recurring when they are US$30-US$45M greater than what MSGI ever report?
2. has a client base of some 5000, with no single client representing more than 5% of revenues;
It is good not to have big client exposure. But some clients are not paying and reserve for bad debt is increasing. This is not good. You cannot be writing business that you are not collecting. Days sales in AR is increasing from 104 days last year to 108 days this year. It needing to be going the other way
3. is focusing solely on its core marketing business;
Single sense of purpose is good. But they also seeming to be focusing on Platinum Parachutes, and lifestyle of dotcommery excess. We not a dot com any more, eh?
4. has no more Internet business/focus; no more cash drain;
That meybe true. But Big Bath Accounting happen and meybe they have to be restating and it fall into the new year. Type in "SAB 100" in any search engine and be reading about it.
5. is now cash-flow positive and will very likely be earnings positive beginning 2nd Qtr. FY2001, which qtr. began Oct. 1; (this is MSGI's largest [X-mas] Qtr. of the year)
I understand about the seasonality. To say it is cash flow positive means what? Cash flow from operations? Cash flow from financing? Cash flow from operations and financing? Will any of the EBITDA from Grizzard be realized? Will it offset negative EBITDA from MSGI? So meybe you are saying some of the EBITDA from Grizzard meybe offset all negative EBITDA from MSGI and there for net net these things are likely? The 4 horsemen are still running the ship! It looking to me like they never believe in budgets
6. is trading at about 0.23x FY2001 revenues (sector averages is well above 2x revenues);
Multiple of revenues is old metric. Remember, when CMGI was US$165? NAZ crashed because people not believing those metrics and multiple of revenues was real indication of value.
7. currently trades at less than 1/3 book value;
And has US$150M of intangible assets on book. You can not touch them, you can not smell them, you can not borrow against them, you can not buy a hamburger with them. All you can do is write them off. Over time or as impairing charge. The market is trading as if meybe US$50M or more of those intangibles are bing impaired.
8. has $10 million cash and still has yet to liquidate WiredEmpire and sell Pegasus (will probably net another $3 - $4 million);
Cash operating expenses US$133M this year. So you saying MSGI has cash for 27 days of expenses, eh?
9. received a "clean opinion" with no ongoing concerns by independent accountant in 10-K filed Oct. 13, 2000;
It is true they receive a clean opinion. What happens if they must be restating f/s from Big Bath Accounting?
10. industry/sector still projected to see explosive growth, direct & Internet marketing industry, $205 billion by end of 2001 ($153 billion in 1997)
OK, more is better. Any body in the industry producing the profit for the stock owners?
11. its CEO, JB, picked up 200,000 shares for $1.3 million ($6.5 per share - perhaps he's just an idiot) - but there has been no insider selling, at least.
Compensation committee also granting him ADDITIONAL options on 800,000 more shares for working extra hard through June 2000. We lose US$75,000,000 through June 2000. I am having real problem of punishing the stock owners by rewarding results like this. It is reminding me of Computer Associates. But stock owners make them give it back.
ragingbull.altavista.com
Regards,
John Madarasz |
