Jerry:
I wanted to wait to respond so I didn't take away from the President's State of the Union speech -g-.
<<However, after the little table, your text starts out like a novel and reads like a Stephen King novella for the high-tech industry. "For reasons known only to himself, Disodado Banatao, the chairman of the Board sold 59667 shares of stock on Jan 27 and 28.">>
You of course have picked up on the key to unraveling the S3 puzzle. Why did he do it?
Why does the founder of a company suddenly initiate an action which seems to preclude the restatement of earnings for 1996. ( Without the restatement, the company's future, Mr. Banatao's career, and the careers of other management are all put at risk.) Why does the need for funds arise so quickly? (Mr Banatao could easily have sold the stock earlier in the 4th quarter for the same price without any impact at all.) Why doesn't Mr. Bonatao borrow the funds from the bank using his stock as collateral (and pay the loan back after the earnings restatement comes out.) Why does the rate of improper revenue recognition suddenly rise during the 1st and 2nd qtrs 97 after the stock sale?
And, of course, why demote Mr Banatao if he had nothing to do with the irregular accounting scam. (Simply fire Gary Johnson and replace him with Terry Holdt.)
Lots of questions. Not enough answers. (The answers I do come up with I don't care to post publicly.)
Jerry, I was one of this stock's biggest promoters during the summer and the fall. You can check with some others on this thread or my previous posts. I have been patiently waiting to see if I can jump back in again to make some money on S3. But, after reviewing S3's history, I have come to the conclusion that this dime novel story isn't over yet.
I believe charges will be filed by the SEC. (If they don't file them here, where would they file them?) This case differs from most in that revenue data appears to be deliberately inflated and presented to the auditors as accurate. I don't think that's going to be allowed to pass.
I hope you and all the long investors make money in S3. But I will be sitting on the sidelines for awhile.
Good luck,
Ken |
