SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: rjm2 who wrote (11848)1/14/2001 1:51:12 AM
From: Don Earl  Read Replies (2) of 78632
 
rjm

"Its hard to ignore it based on cash flow."

And easy to ignore based on free flow cash. Video stores HAVE to buy new movies to generate revenue. The cost of purchasing those new movies are capitalized. It doesn't matter that those costs are incurred EVERY quarter as part of doing business, for GAAP purposes, being capitalized it doesn't hit EBITDA.

Store fixtures, old movies and goodwill don't have a lot of value in a liquidation. I sincerely doubt there are enough assets to cover the $50 million line of credit, let alone accounts payable. My guess is the frequent opening of new stores is also a normal operating expense as the company seeks new markets for old inventory. At least the new stores don't seem to be adding much in the way of income to the bottom line or even the top.

Running up the line of credit by $5 million while buying back $5 million worth of stock also doesn't impress me. It looks like very expensive hype.

My guess is Chapter 11 within 18 months unless they can sell a whole bunch of stock or find a sucker to buy a ton of junk bonds. No offense to those who like MOVI, but it looks booby trapped to me. Try looking at the debt to equity ratio after taking out goodwill and figuring store fixtures and old movies at .30 on the dollar. Figure book value the same way.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News