Response to R. Harmon on buying a "Cash Cow".
Sorry, did not make myself quite clear. Some clarifications :
In general the intent was to estimate how much cash could be squeezed
out of CIST ( within short period of time ) if the whole company was bought
and their assets sold out, and respectively a return on this investment.
That would certainly be a consideration for the current owners or anyone
with enough cash if they believed that management is " a bunch of clowns ",
not adding any value to the co., which seems to be very far from reality.
But the reason I brought it up is that if the price of the stock heads south
of $.3 the turnaround and a quick profit may start to seem more lucrative
than waiting for the future earnings to show up and be converted into
appreciation of the price of the stock. ( "Bird in hand"). The lower the price
would go the more lucrative the prospect of turning around would get.
Of course turning the co. around would take some time and involve a good
chunk of expenses, hence extra conservatism in the assumptions.
( As and example if one could buy this co. for $2.8M ( or $.1 a share ) and
almost certainly sell the pieces for $8.4M within a year, he'd be looking
at 200% annual return vs whatever the rate @ which he expects the stock
to appreciate on its own over some time. )
Now, I will try to address the specific questions re: the assumptions.
#4 I do not know if this particular settlement is taxable, but assuming
it is, is definitely conservative.
#3 It was mentioned somewhere before that some people worked w/out pay
for the past year and are due some $ompensation @ $200/hr.
Also mentioned before that the permanent stuff is 5.
( assumed that all five of them were putting 80 hrs a week for the past
year, have not got a penny, and will be compensated @ $200/hr ).
Have thrown in $840k for insignificant other, since the part of the
that CIST is not going to see is covering significant other.
#2 Was mentioned before that CIST was suing for 3x the damage resulted
from infringement of their patent rights. Assumed that the damage
caused is not worth more than the patent itself. Also assumed that
Immunex settled for less than what it was sued for. So,
$21m < 3 x damage ==> damage > $7m ; patent worth > damage > $7m.
I was just trying to use the info in this thread and some common sense.
I am not qualified to provide personal financial advice, consult your financial
planner, attorney, mother in law. I own CIST stock. All of the above is MHO.
Do your own homework ( in the future DYOH ), blah-bla-blah.
With respect,
Vadim.
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