In looking over some of the company's SEC filings, I have searched in vain for the "good news" that I would very much like to find. I am long the stock and called VistaQuest this morning for clarification on some issues. I spoke with Mark or Bill Kabash (didn't catch the name).
Q. Why did first quarter revenues fall 40% to $340,000 when it has been stated that the teleservices business is going strong?
A. Quarter-to-quarter fluctuations as to when revenues are recognized. Arrangements for a given event may be made 5-6 months ahead, but the credit card is not charged until the event actually happens. He stands behind the statement that the teleservices business is going strong. (Note: I believe it is general consensus that the teleservices business will be profitable in the 2nd quarter).
Q. How many shares are outstanding and is the company going to issue more stock?
A. 39 million shares outstanding. The company will not divulge its plans regarding future stock issuings. The key point is whether issuing more stock brings in greater earnings per share (i.e. is the activity for which the stock was issued accretive or dilutive).
Q. Why is "everybody" ( 6 different parties) trying to sue TSIG?
A. TSIG disputes the claims represented in the lawsuits. If TSIG loses every case (unlikely in his opinion), the total liability is $2 million. I pointed out that such information in the 10KSB casts a cloud over the company for the potential investor. He said he could see that may be so.
Q. On the front of the SEC documents, why is "Standard Industrial Classification" listed as "Blank Checks"?
A. He doesn't know.
Q. Is it true that board members were cut out of the Compact Connection deal, and they are leaving in anger?
A. Board members are not compensated with regard to the Compact Connection acquisition. Board members serve at the pleasure of the stockholders. (Note: insiders hold a majority of the stock. He would not state whether board members are leaving or not.)
Q. Given the following scenario regarding Compact Connection: Revenues of $30M in '98, $60M in '99, $100M in 2000; assuming a 8% net margin (several incentives for Mr. Piercey, CEO of CCI, kick in if he can achieve net margins of 8%) implies a net profit of $8M in 2000. Eight million dollar profit with, let's say, 50 million shares outstanding (an estimate for 2000) is $.16 per share. A PE of 20 implies a stock price of $3.20. How can a double-digit stock price be reconciled with the above scenario?
A. Compact Connection will be only one defined revenue stream. TSIG is essentially a teleservices company with tremendous potential for synergistic, overlapping revenues. Mr. Kabash is recommending TSIG as a buy to his friends and associates.
Mr. Kabash feels that the recently announced hire of Mr. Heideman (teleservices specialist from AT&T) brings tremendous credibility to TSIG. He says Mr. Heideman could go anywhere he chose, but he came to TSIG because he sees the potential. He remarked that Mr. Heideman has "fire in his belly" and would not be content to see the stock price languish at $4-5.
I've tried to be as accurate as possible in relaying this information, and do welcome your discussion, correction, and rebuttal.
Regards, Suzanne |
