what a load of horsesh.t! TLC was crashing last yr because it was losing mkt share & pricing. TLC was also hauled over the coals by analysts for using aggressive writeoffs and met one on one with that one analyst to try to convince him.
Things got so bad, it threaten the company & it's ability to even
deal with the debt.
At that point Bear sterns introduced Thomas & co and convinced TLC into a sweetheard deal for T/Lee&co.
That's when the hype machine went into action: dog&pony shows, press releases, & last fall when sales were falling, TLC was forced into buying companies.
TLC made promises to everyone that things had changed:
pricing had stabilized, American girls was a hit, and this sector
was a growth area. it worked! hype generated more hype but nothing's
changed if you understand the accounting.
Risks remain the same or have even worsened.
Piper Jaffrey & Alex Brown have listed 6 major issues.
one that's most obvious to anyone is the rebate program.
Rebates originally used just to buy up marketshare and TLC promised
they would stop in Jan/98. Guess what? TLC started a vicious pricing war with rebates and they can't afford to stop it, they extend til Dec98! the ave selling price is now $19.99. 25% less than all the analysts reports!
Now there's also evidence that TLC titles are falling off the charts again. TLC needs to spend more than 10% to upgrade them, but can't because it cash short.
calling prichards crazy?
1)he 1st pointed out the share dilution to 80 M last year!
2)he also warned against the falling prices.
3)channel stuffing, high allownaces, longer dso's & decreasing cash.
4)he also pointed out that if TLC hadn't acquired those 5 companies last year, TLC would have fallen short of estimates.
Now with Mindscape, they overpaid 25 times earnings, and
there's a real conflict of interest problem with the distribution agreements for ADAM, Leggo, & Grolier. That in itself accounted for $25-30m in sales, which TLC will never make up if lost, making the deal even more expensive.
He aslo pointed out the perils of the Reg S deal, where investors really pay for the acquisitions by having the warrants converted into shares and sold short now .
Yesterday, someone sold 800,000 worth of call options. today they sold
200,000. all for april. This is the beginning of the liquidation of the warrant holders, and TLC investors will never know what hit them.
In about 2 months TLC will make for a great short like viasoft, today but will need your help until then. Keep buying & thx |
