Touche', but....
Credibility, as you point out, is obviously an issue with new investors. And, most will take a wait and see approach. Others are accumulating at levels below $2 anticipating this to be an excellent value play. In the meantime, below is a post from Raging Bull regarding MSGi's recent announcement of acquiring Perks.....
From RB:
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MSGI and Perks Acquisition::: What seems noteworthy about this acquisition are four points found within the below two paragraphs of the recent press release biz.yahoo.com :
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Established June 1998 in Los Angeles, Perks has become a key player in the very large and rapidly expanding market for customer loyalty and performance improvement products and services. Bridging the gap between online and offline behavior, the company provides simple efficient, flexible products that generate incremental sales and fast payback from customer and employee retention, motivation and ultimately loyalty. [1.] This past June, Upside Magazine named Perks as one of 100 best young companies in the World.
Perks' products are being used by a growing number of businesses including [2.] CitiGroup, Sony, Cendant, Infiniti Motors, Showtime, Dr. Pepper, Electrolux, Active International and KeyCorp. [3.] Major outside investors in Perks include, Chase H&Q, New Millennium Partners, Wasatch Ventures and Zone Ventures. [4.] Perks is expecting to generate approximately $10 million in revenues for the fiscal year ending June 30, 2001.
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1. Extremely promising company, at least in the view of one media publisher;
2. Blue-chip client list, including "NextCard," (which was not listed in the release -
perks.com - clients);
3. The backing of Chase H&Q certainly perks one's interest (no pun intended);
4. Additional revenues of approximately $10 million - thus creating annual revenues at least in the
$240 - $250 million range (with no longer any more Internet incubation cash drain/drag).
Though the details of the Perks acquisition are sparse, what is clear is that it is an all stock deal - no cash, thus no additional debt service. Although the press release makes no comment as to whether the acquisition will be accretive, my guess is that MSGi isn't foolish enough, in this market and given the WiredEmpire failure, to take on another cash-depleting or profit-losing venture. I think it's almost a given that the Perks acquisition will result in further business integration and profits in future quarters. Just my thought/opinion, though.
Nonetheless, this MSGi acquisition sends a message that all's well with MSGi, that it is fiscally and business sound - thus the explanation for the all-stock deal, and that it remains focused on expanding its core business with without acquiring additional debt. "There's value in them there deals......" As always, time will tell. Good luck. |
