TO, here's my analysis on ACLS.
Net working capital as reported at 12-31-08 was ~$111 million.
Net effects of the SEN deal are:
received net proceeds of $122.3 and
applied $86.4 million to payoff, so add ~$36 million to cash.
Also, the ~$83 million current liability of the debt is gone.
so 12-31-08 NWC plus effects of SEN deal = 111 + 36 + 83 ~$230 million.
I agree with you that inventory is the key issue.
Of the $230 million NWC, $150 million is inventory, which leaves ~$80 million non inventory. As of end of Q3 inventory was ~$177 million. Q4 they wrote off inventory of ~$23 million and had ~$150 million left, so they only aided cash by ~$4 million (177-150-23). NOT very good at all. Worse yet backlog is ONLY ~$ 20 million!! it would take almost TWO YEARS to work off that inventory if the factory stayed completely shut down! Obviously that's not going to happen. My point being that inventory has not and probably can not be managed in a way that will provide much net cash to operations.
Operation costs are about $33 million per "Q".
Research and development $13+ million,
Sales and marketing ~$8 million,
General and administrative ~$12 million.
based on last "Q" and the huge reduction coming in sales, I expect nil in gross margin, so look for $30+ million per "Q" in losses.
We've already completed an entire "Q" since the above numbers!
To sum up.....
1. 12-31-08 NWC + SEN deal ~$230 million.
2. ~$150 million is inventory, which leaves ~$80 million non inventory.
3. Losses expected ~$30 million per "Q"
4. I don't expect much help reducing inventory / creating cash.
5. If non inventory NWC was ~$80 million, at end of Q1 it would be closer to ~$50 million. Obviously, projections from that point are very grim.
6. Current fundamentals not expected to uptick much.
At first glance if one looks at tangible equity relative to stock price it appears cheap, but using the above I think the current quote is generous.
Bottom line, I do not think ACLS survives.
I bought some a while back in the $.50's and a large block in the $.20's. I've sold it all for a small profit very recently.
If you or anyone has alternative scenarios with the numbers or assumptions I've made, I'm willing to listen.
Regards, Eric. |
