Sparky,
I've been purchasing shares on any pullback.
My nearterm outlook has actually improved sightly from early 98 based upon several assumptions and minor developments that have transpired. Some of my conclusions are based upon guesswork and my true sentiment on Q1 is I don't much care.(although I'd be elated if EDUSF was able to gain momentum from q1 results). I am still anticipating rampup of revenues followed by earnings with the release of "My First English" in Q3 and Q4.
Domestic (USA) demand for this software far exceeds English Discoveries courseware which is geared to the young adult. It looks like Bilingual Education that was tested in the southwest has not developed to plan. The strategy turns to a one language education system (English) that means very early English instruction. Henley is well positoned here to offer the necessary courseware. Simular situations exist Worldwide for the adaptation of early english instruction into the mainstream educational process. All Asian markets will prove out,The recent difficulties there have only strengthened the need for western participation in there markets. The need there is driven by a shift in economic and cultural forces.
Latin America is enjoying continued growth. The need here is across the whole spectrum of courseware offer by Edusoft and Degem.
Europe going to one currency, will they also shift more toward one language, what language would it be?
Africa, India, Asia and (russian)markets not hardly scratched.
Some of the observations focused more near term include.
Edusoft handled the Dividend much better than I expected. Valuations has improved since X date. Although puzzled on first announcement, the money was a nice windfall. A significant amount never left Edusoft. The debt was paid down by Degem. My rational(which others may find fault.) If Edusoft was having a poor q1 it would be difficult to justify a dividend unless it was critical to Degem's health. The advance of Degem doesn't bear this out. Alternative, EDUSF really is a cash cow.
From a valuation standpoint it's actually somewhat positive. ( less is more,"has he flipped"). In spite of a successful 97, with fabulous earnings Edusoft shares sour. Not for lack of value, great margins and ultra low PE realative other software peers. This market does not want low PE tech's. Edusoft wasn't benefiting from it's cash position, so why not give it to investors. RONA should increase. It only improves the chances for an equity sale and even suggests an improved likelyhood. CASH and Curent assets is not what acquisitions are made for. It's future earnings not past earnings. Earnings on cash are extremely predictable and it's a zero sum game. The cost of acquisition, the Due Diligence increases linearly with the cash held. Edusoft assets decrease by 2.5 million, owners (shareholders) increase by 2.5 mil(less tax), company on sale by 2.5 million less than previous.
I suspect some marketing developments have materialized around "MFE" and "ED" via new marketing manager from France. Managers initative, SELL ESL.
Degem continues to rebound. Edusoft and Degem are mutually benefit. Degem recieves royalities for software sales in the Americas while Edusoft benefits from the developed marketing channels that Degem has built worldwide.
Edusoft has implied on Website that Latin Americas remains strong.
Biggest shortcoming I see is the resistance that has developed at prices above 200DMA. A breakout above this level will foretell.
As usual small caps are speculative and volatile . Foreign companies present additional risks.
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