I think your thoughts are well presented. IMO, there are three possible ways mgmt. can increase shareholder value:
1) Continue to produce new product, but keep expenses in check when doing so. Being in the industry they are in, KLOC can't cut corners in the cost of producing films, TV shows, or videos in ways that bring down production values, but production values that don't add value to the consumer are meaningless at the same time; obviously, there is a tightrope here, and trust has to enter into the picture here, as one has to hope producers know what they are doing.
Beyond increasing revenues, the co. can best impact the bottom line by keeping G&A expenses in check. Mgmt. has to keep its margins up, and this is one area they have a LOT of discretion.
Much has been made of Mssrs. K & L's salaries in this thread. I don't see their salaries being a problem as long as the salaries are tied to or are otherwise consistent with performance.
2) Stop issuing add'l shares. I believe that there are currently a little over 31 million outstanding, with a proposal for 7 million out on the table (has this been approved yet? Somebody please post if they know.). We, as shareholders, need to demand that the co. detail the rationale behind this, letting mgmt. know that more shares being issued to line mgmt.'s pockets makes for some very unhappy investors. I have read the SEC filing at EDGAR, but I'm not satisfied with what's there due to the legalese. Can we pressure mgmt. to send an open letter to its shareholders, plotting out its plans in this area? To do so w/ benefit all parties.
If the co. curtails further stock issuances and continues to builds profits for a few quarters, the stock price would react favorably. Until then, I am strongly urging all shareholders not to approve any proxies that authorizes more shares. If any shareholders who participate in this thread live in the L.A./Hollywood, I am asking them to call or visit corp. headquarters to get some answers and to convey our concerns to mgmt. If done, please post results here.
3) Sale of the co. Right now, we all have to admit that the co. is pretty much in the 'B' grade area of the business while SLOWLY building a rep for becoming a smaller player in the 'A' grade sector of the industry. I don't know how much of a market there would be for the co.'s inventory, or library, but mgmt. once again needs to give us some guidance in their long range plans here. An acquisition of the co. by a larger one obviously would reward us if the price and terms were correct.
As things stand, the co. is only a hit or two away from growing this thing into a more prominent name in Hollywood, but the question is obviously how long will it take and how much equity will we have by the time it happens.
|
