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Pastimes : LIST of COs. WITH HIGHLY QUESTIONABLE ACCTG. PRACTICES
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To: Jennifer O who wrote (25)4/23/2001 12:14:50 PM
From: Paul Berliner  Read Replies (2) of 59
 
ASGN and POS hit hard after surprising earnings news:

Analysts had been not been expecting weak results from ASGN or a weak next Q from POS:

p.s. I am working on more companies to add to the list, as I havn't updated it or the lbcapital.ckt1.com site since January! I have been way too busy.

CSFB on ASGN:

· On Assignment missed its first quarterly consensus EPS estimate in the company’s thirty-five quarter history as a public company.
· EPS of $0.21 (up 12% year over year on a 15% top-line gain) were $0.01 below our estimate and the Street consensus. All growth was organic and internally financed.
· We retain our Buy rating, as ASGN trades at 18 times our new 2001 EPS estimate and 16 times our 2001 free cash flow projection. Our new one-year DCF-derived price target of $31 offers 82% appreciation potential. We believe the current stock price offers an attractive entry point.
· With $76 million in cash and no debt at quarter’s end, management can repurchase 18-19% of the company’s shares with cash on hand.
· With the share price well below levels at which it makes financial sense for ASGN to make a niche acquisition by pooling, we expect the board to announce a large share repurchase on or before its May 1 meeting. Any pooling acquisition over the next 12 months at a share price of less
than $30 would be met with a swift reduction in our investment opinion.

CSFB on POS:

Fourth quarter EPS of $0.25 were in-line with our estimate and the First Call consensus and flat with last year. Fourth quarter revenue of $113.4 million increased 21% and was $6.2 million or 6% ahead of our estimate owing to higher
than expected 28% growth in the core business. The strong core business growth was offset in part by lower than expected growth in each of the other the units: Health Resource Publishing, up 40% versus our estimate of 60% growth; Europe down 34% versus our estimate of down 20 to 25%; and Supermarkets Online, down 31% versus our estimate of a 20 to 25% decline. These newer divisions were also short of expectations in the last quarter, but we note that the magnitude of the negative variance has widened. At the same time the magnitude of the positive variance in the core supermarket business has also increased.
Management reiterated guidance for revenue and earnings growth of 20 to 25% for the upcoming fiscal year ended March 2002. However, the new information is that the first quarter will produce flat EPS growth and overall revenue growth of 10%. Further we estimate 10-15% revenue growth and flat EPS in the second quarter as well, making the year extremely back end weighted. We believe this information will likely be negatively received by the Street, putting pressure on the shares in the very near term, and limiting upside potential for the next three to six months.
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