Financial Analysis of LNUX
Many thanks to WOSG for great research
WiseOldSuperGenius, a friend and member of POSAlert Club
Revenues. Let's see the trend:
Q1 2001 (10/00): revs $56m, loss $52m
Q2 2001 (01/01): revs $42m, loss $74m
negative gross margin!!
Q3 2001 (04/01): rev guidance ~$20m, 21m+
oh yea, that 21m loss is "proforma" meaning
the stated loss will really be bigger AND
huge restructuring charge of ...???
NOW ... let's fill in the blank for Q4, given than DELL just said in April 6th that layoffs werent necessary, but this WEEK decided to lay off workers due to a "PRICE WAR" in the PC server market. Factor in the latest news of dot-bomb equipment gumming up inventories of distribtuors, and the fact that CSCO will give no guidance. Let's be generous, and say it wont get any worse (*very generous*)...
Q4 another $20m revs (maybe), and $40m hit to balance sheet.
This is from their quarterly of Jan 2001:
"The lower demand
for our server products was primarily due to the general economic slowdown, which significantly impacted the spending of our "dot-com" customer base. "
THEY HAVE A CUSTOMER BASE THAT LARGELY NO LONGER EXISTS! These guys were pick-axe sellers to the dot-com gold-diggers, and will suffer the fate of the dot-bombs without an customers and margins that are hugely negative. The sales will not bounce back, not when Dell is on price war-path.
And dont think they switch to services and remain viable, that's only 10% of their revs:
"The Systems and Services business segment and the OSDN business segment accounted for $37.9 million or 89.2% and $4.6 million or
10.8% of net revenues, respectively, for the three months ended January 27, 2001, ..."
They have less money than you think:
"At January 27, 2001, cash and cash equivalents totaled $66.7 million, down from $123.8 million at July 28, 2000. "
they also have $59m in short-term investments, but have $45m in current liabilities, so net-balance of working capital looks around $80m at best.
And the cash is flying out the door:
"For the six months ended January 27, 2001, we used $37.5 million in cash for operating activities, compared to $13.1 million for the six months ended January 28, 2000. "
and they blew out cash in 'investing activities' meaning property and equipment etc. actual change to cash levels was a loss of $60m in cash in 6 mos. $10m a month.
This means, bottom line: With about $80m left, cash loss of $20m *minimum* and restructuring to take out more assets from the balance sheet, they will be at the edge by August, with small sales, negative margins and bigger hungrier competitors.
The end wont be pretty.
PS. A brilliant track record, just like ETOYS:
"At January 27, 2001, we had an accumulated
deficit of $235.1 million." |
