An "Overview Issue" of The Napeague Letter was e-mailed to each
subscriber last night. These "Overview Issues" summarize the current
status of each stock followed by TNL. This issue included the following
comments about Trans Net (OTC BB:TRNT):
After the market closed on Thursday, March 25th, TransNet announced
the termination of its asset sale to GECC as the result of TRNT's loss of a
major customer. A hypertext link to the complete press release is on the
TNL website.
I had an opportunity to talk with TRNT's management on Friday evening.
During this conversation, I learned that most of the business done with the
"major customer" is in the form of Hardware purchases, which are
relatively low margin (as has been discussed previously in TNL). This
relationship was reportedly terminated because TRNT could not provide
the "global" hardware support that the client needed. Although it produces
much less revenue, TRNT also has a Software & Support relationship with
this customer, and the Company expects that this relationship will
continue. Based on this information, I suspect that after this relationship
ends in 6 to 9 months, we will see an abrupt decline in revenues,
accompanied by a very much smaller reduction in gross profits.
With regard to its possible reinstatement to NASDAQ, TransNet will hold
its annual shareholders meeting on April 2, 1998, which will eliminate the
reason for its initial delisting.
On Friday morning, after the announcement, the price of TRNT fell to
$0.75, but rebounded during the day to close at $1.09. This demonstrates
the foolishness of taking any action in the stock market in extreme haste
and panic.
Bob Davis
The Napeague Letter
napeague.com |
