Good points. I'm aware of their foibles, particularly under the self-promoting guise of Weitzen -- mister "we're going to grow 25%/yr 'cause I say so". I'm betting on two things though: that all the bad news & screw-ups are more than factored into the price, and that Waitt will clean house (has already done so, in large part). I do recognize Waitt bears some responsibility for Weitzen-era excesses, but it sounds like he tried to be a very hands-off chairman -- mostly sucked up by his foundation work, until it got too painful to continue trusting the guy who all the suits had told him was more qualified to run a big company than him. In this way, I see the situation as bearing a great deal of similarity to Apple 3.5 yrs ago, when Jobs came back and cleaned house. Firing all the top dogs, as both did upon re-entry (Jobs persuaded the entire board to resign, coming from the position of a non-employee consultant!), is a very visible and potent sign that things are going to change IMO.
They have a good shot to be #2 US consumer pc marketer behind dell. Relationship w/ AOL may help, if internet appliances ever take off -- but I don't think that's necessary to make this a good buy. Buying a company with 9.6B in most recent year's revenue for 60-70% of sales (particularly since that's close to a 5yr low for most companies in the industry) is not speculation in my book. The current justification for this low p/s is low profit margins -- but I'm betting it'll be relatively easy to chop out much of the empire/ego-building cost structure slapped on by Weitzen.
And I do like the present apathy among investors, and outright hostility by analysts (most of whom were tripping over each other to gush about GTW's prospects only a year ago). By the time the analysts are recommending buy (and chat boards are humming), the stock will probably be fully-valued. That was my observation with Apple over the last few years -- it too started off scorned by all in late '97, and it was time to sell when most of the analysts had come around and the chat boards were pages long each day. |
