Jay and company,
I talked to David Kesick this week at TREV and got a few interesting tidbits. First, Dave is leaving in another week or two as part of the restructuring! They will no longer have an IR person on staff. According to Kesick, they don't need him any longer and he is fully vested in his stock so he can walk away with the future upside still in the stock. Either way, I think it will be good for TREV. The guy who ran software development (John ?) is also leaving and not being replaced but they do have a team that does his job now.
Leto apparently took 300,000 shares outright (they are not options) to take the 50% paycut. They have a holding period of 1 year. So, even at todays lousy price, he didn't really take a paycut. I do think Let o is a bright guy and he must think those shares will be worth a lot more in the future.
Kesick also said they are taking a $1.6 million restructuring charge this quarter, of which, $600k is cash. I have seen no public statement of this charge but it may explain the recent weakness in the stock price. Some of it is to pay off the folks leaving and some of it is to cover possible bad receivables. If this charge is true, it means another quarter in the red before they turn a profit.
Finally, he said the company is likely to be sold in the next twelve months (maybe $3-$5 range). He said that Wall Street was aware of this and that is part of the reason why his job is not needed. Why convince analysts to cover your stock if you ultimately are going to get bought. I
Considering the source, I'm not sure how much of this to believe but it does explain several things. First, the restructuring is real and should be good long term. Second, this restructuring charge for this Q is probably real and is likely the reason for the price weakness. Also, it sounds like the Storage Tek deal has no real products or revenue for either company in the next few quarters. It sounds like they haven't even really defined what it is all about.
The last thing I'll add is the question "where are the deals?" I asked this question but got nothing as usual. He did say they were on track to beat Q4 revenue which was their best quarter ever ($7.4M?) and this matches what Leto said in the last conference call.
If anyone has any comments or anything new to add, please do so. I've gotten killed on this the last couple years and would be happy to get out, even at $3 per share.
Good luck and go TREEV,
George
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