Well, gcrispin, thanx for your comments.
One can’t fault your numbers regarding CKSW’s Cash and Short Term Investments. I have, however, to question the relevance of those numbers with regard to the ongoing performance of the company.
Needless to say, it’s certainly far better to have cash then not have it, but it’s a question of whether or not it should be sitting on the Balance Sheet earning +/- 6% to 8%, or rather having been spent on the purchase or upgrading of assets, an acquisition of a company to complement its business etc.. etc..
Maybe CKSW sees this cash as a "war chest" to do some acquiring in the future .... we’ll have to wait and see.
You say it’s best to view this company on a Quarter to Quarter basis. I would agree, but then isn’t this the basis on how one should view and analyse ANY company, without exception. After all, on what other logical and factual basis can one draw conclusions about the current Fundamentals of a company, other than to regularly scrutinize its Financial Statements ?
The fact that CKSW has been successful with contract wins is good news. However it’s now a question of whether or not the company can make decent Turnover AND Profits from these contracts. But judging by its past financial performance this may not be "a given".
CKSW lost money in 2001 and 2002. It managed a profit in 2003, but it went backwards in 2004 and only managed to make 50% of its previous Bottom Line. Things got worse in 2005 where its Bottom Line deteriorated to the tune of –300%.
IMO CKSW’s problem area lies at the Turnover level. It’s just not currently producing enough Revenue to compensate its ongoing increase in Cost of Sales and Running Expenses. Hence my previous comments regarding the fact that it’s losing money at the EBITDA level, and has a poor Return on Capital Employed.
The question now is, "Will CKSW be able to improve on its previous performances, having obtained these new contracts ?"
As usual, its future Financial Results will answer that question. Anything else, IMHO, is speculation.
And personally, I wouldn’t be buying its stock until such time as it confirmed its ability to make ongoing Bottom Line profits and provided value for its shareholders. |
