In a market like this, I don't think there are too many investors looking to buy. I just got online to check my portfolio and it's red across the board with a couple of unchanged. This is a portfolio of mostly conservative stocks too, so it's not just MKD getting hit. Nortel went down over $13.00 today. Ouch, eh? Let's see what happens when the market stabilizes a bit.
I'm not too clear of the division of responsibilities for the CD plant. What I'm guessing is MKD is in charge of financing and running the plant. Compact Disc Inc. is the primary customer (and 40% owner). Their business is distributing compact discs to Western Canada and areas where the recording artists sell. For instance, Spinner Records has at least one gold-selling artist I know of in South Africa.
I've heard CDI also distributes discs for other companies and labels. They appear to be the primary company to sign the manufacturing deals for the plant, not MKD. Remember the mumblings about a company in Seattle wanting 750,000 discs per year or something like that? When I asked MKD about it, they referred me to CDI since they were handling the details. These facts should be confirmed because like I said, it's just an educated guess.
In my opinion, it looks tough to blow the CD deal. They have the necessary funds. They're not making a product (CD equipment); they're buying it with the exception of the mastering equipment, which they're partnering with a company in L.A. For customers, they don't start off at ground zero because they already have a feasible capacity filled by their partner.
I'm going to give them what I think is a realistic timeframe to get the plant into production and re-evaluate the company again at that time if the plan changes. They're a little behind their expected schedule, but they have completed everything so far. The financing was the critical step and they completed it. |
