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Microcap & Penny Stocks : Transnet-TRNT
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To: Bob Davis who wrote (135)6/17/1997 11:24:00 AM
From: Bob Davis   of 140
 
As I've indicated earlier,TransNet's third quarter results were somewhat disappointing. I am specifically concerned about two issues:

1. A decline in gross margins in their Service & Support business, which appears to be the result of an increase in staff costs. It is not clear whether these staff costs increases are due to additions to staff to support new business, or salary increases to meet competitive offers in a market where skilled technicians are in short supply.

2. An increase in accounts receivable in excess of the levels that would result from TRNT's sales increases.

The relative weakness in revenues is due to a shortfall in Hardware sales. This is not too disturbing; because of their relatively low margins, changes in Hardware sales generate much smaller changes in net income.

As a result, The Napeague Letter has lowered its earnings projections for fiscal 1997 to equal the $0.19 achieved in 1996.

An updated in-depth Analysis of TransNet has just been posted to the Napeague Web Site at napeague.com. This Analysis includes a spreadsheet showing the recent financial history of the Company, and provides more information about the development of the projections for the rest of 1997.

NOTICE:
This analysis is based on publicly-available information, and is in no
way warranted by me as to accuracy or completeness. I do not guarantee to advise you as to any change in this information. I currently am a stockholder in this Company and may from time to time purchase or sell this Company's securities. I otherwise have no affiliation with this Company, and I am not compensated by it in any way whatsoever.
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