Carl, it is not so much the loss which will scare the street, it is the precarious financial situation, $10 MM annualy in interest charges (and interest rates are now low, if they were to rise, Oy-Vey), and more important, the line of credit is probably close to or is maxed out.
They have to go north of $30 MM in sales quarterly to start and generate positive cash flow, and north of about $35 MM to cover their interest charges. Right now, any bottom line money is going to pay interest. Where will they generate the cash to grow? If by miracle one of the next few quarter reaches $35 MM, they will need a source of at least $5 MM to support this increase in sales (increase in working capital). The street will see that the losses are not just "cosmetic losses" but "cash bleeding" losses, and get quite discouraged. Well, the street will speak tomorrow.
Zeev |
