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Biotech / Medical : ACMI - Accumed Inc.
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To: Frank Buck who wrote (1241)1/22/1998 3:07:00 AM
From: Sigmund  Read Replies (1) of 1894
 
Well that is the dilemma. If NewCo has no capital requirements why should it go into the capital market? If they have no capital requirements how are they going to attack such a large market? Even if there were no major R&D requirement, there would be working capital requirements.

I think that this plan is at an early stage and not that well worked out the truth be told. I think there must have been leaks or some reason to announce a plan that has not yet been formulated in a great deal of detail.

All of this will get worked out as time goes by.

Are you or Cisco in a position to make a sales and operating profit forecast for the remainder of ACMI the part not contributed to NewCo? That would help us get a handle on what we have here.

Then we need to make a forecast for NewCo itself.

Comparing these two entities may help us understand what the companies strategy is.

The focus of the questions during the conference call seemed to be on the impact of this move on relieving the drain on ACMI's working capital and achieving breakeven quickly. Of course that is extremely important but it gave the impression that ACMI was simply dodging a cash drain bullet rather than also instituting a long-term strategy for growth and success. The company attempted to deal with the long-term but their presentation didn't seem to reflect a well thought out strategy.

Perhaps this carve out is something that came up very quickly and which was responded to on an opportunistic basis rather than being part of an overall long-term strategy. Even the choice of term "carve out" suggests to me small thinking rather than a true vision. It sounds like an oil producer's term or perhaps a good term for a real estate transaction where you have a predictable cash flow. I would have much prefered to have this refered to as a JV or strategic alliance.

None-the-less even though this plan may not be perfect, I agree that it probably was a good move. Being profitable in 1998 is a good idea for any company that wants to be around in 1999.
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