John-
NM was profitable last year, albeit largely due to the Ab Roller Plus. If they can get another product like that again, they would be in decent shape. Of course, this assumes that they solve their financial woes and slash costs. If you trust Safeguard, then it's likely that the new management will be successful in restoring profitability. But if there is no new "home run" product like the Ab Roller has been, NM will need to collect a bunch of "singles and doubles," something Hershhorn said could be done. Hopefully, the new management will focus on profitability and the company's strengths. They already expect a loss for Q1, and say a loss for Q2 is possible.
The best time for a takeover is when the stock is very low, as it is currently. Since it should be obvious that NM could be worth 3 or 4 times the current price, the "interested parties" would be smart to take advantage of the low price, not unlike a pack of wolves surrounding an injured moose. Actually, I like wolves. But instead of killing NM, they'd hopefully save us shareholders from NM. The disadvantage to us, and the advantage to the "interested parties" is that the price is low, suggesting that any buyout price would be lower than if NM were trading at $10.
If NM can restore profitability sooner rather than later, the stock price is likely to rise (due to a pleasant surprise, for once). If no one has agreed to buy NM by that point, they'd likely have to pay more than if they bought NM now. I suspect that any potential buyer would be interested in closing a deal soon, whereas SFE and NM would probably like to wait a few months (hoping that the stock price will rise first).
Interesting trading note today: there was a 500,000+ share block traded at about 12:30pm between 4.625 and 4.75. It will be interesting to see what NM does in the next few days. I wonder how far down the stock will fall before there's some positive news.
Todd |
