Stuart,
I have already answered your questions in the TASA Analysis itself, which presumably you have already read.
To quote from the Analysis of TASA which has been posted on the Napeague web site since Monday.... "the 4th quarter contained a substantial amount of "investment spending", both in Selling Expenses and G&A. This "investment spending" supported both the introduction of BookMatch and the accelerated growth in BETA. GAAP requires that such costs be expensed in the quarter in which they were incurred, even though the revenues generated as a result of these programs will not impact the Company's financials until the 1998 financial year. As a result, although the 4th quarter generated $.03 per share, this was largely driven by year-end tax adjustments."
As I have explained in depth in post #171, my initial estimate of $.10 was based on preliminary 10-Q data, and it was identified as such. My current estimate is based on more comprehensive information, as provided in the 10-K Report.
Once again, as I explained in the Analysis itself, I now know more about TASA's marketing plans for 1998, In the Analysis itself (see Financial Projections and Underlying Assumptions:...) I state: "Selling Expenses: Although I had previously projected that certain "economies of scale" would emerge during 1998, which will lower this expense to approximately 18% of revenues, I now realize that the broad range of new products that the Company either has recently introduced or plans to introduce in 1998 will require more intensive sales support. As a result, I am projecting Selling Expenses to hold at 24% of revenues in 1998." This change alone could account for over $400,000 in pre-tax income.
With regard to your valuation process which assigns the Company "a multiple of 15-20", in the Analysis itself, I point out that "The Education and Training segment currently trades at a multiple of 33.7. If TASA were to trade at this median PE, its market price would be approximately $1.69 based on projected fiscal 1998 earnings per share of $.05, and $4.04 based on projected fiscal 1999 earnings of $.12."
Part of our communications process may be that you don't understand that the "Summary" of each of TNL's Analyses is supported by a more in-depth Analysis, which in turn is supported by spreadsheets and "specialized pages" when they are necessary. They are all linked together through the blue Hypertext links.
I'm still sorry about the confusion here. I am also sorry about being a bit "snappish" in my response, since I am not thrilled by the lead sentence in your previous post, especially since I feel that I have already answered your questions in the Analysis which I published on Monday. However, please keep asking questions....really.
Bob Davis
The Napeague Letter
napeague.com |
