Rich,
I've finally taken some time to think about your DD and come up with some questions. First, though, let me thank you for sharing this information with me. It confirmed much of my own DD and leaves me feeling even more confident about my investment in TSIG.
Moving right along--
(1) The state-of-the-art Lucent call-center technology certainly sounds impressive. Do you know: have these capital expenditures been accounted for in the financial statements TSIG has already released, or will they appear in upcoming statements? I'm trying to get a sense of whether we'll see these major capital expenses in the forthcoming 10-Q.
(2) Without hyping or telegraphing, is there anything you can tell us about the new products and services Mr. Gordon told you about? You've suggested some very exciting developments are on the way, involving significant revenues.
(3) Regarding the CD business: do you get the feeling that TSIG will put more effort into recruiting customers directly or into recruiting a team of dealers? That's to say, are they going to move boldly into a retail business model, or are they going to remain closer to CCI's roots in wholesaling? The margins on MusicCard sales are superb for direct sales (60-70 percent, compared to 20-30 percent for sales made through dealers), but cultivating the dealer base may well make more sense, given TSIG's limited cash for marketing.
(4) How does TSIG plan to stay in touch with people who have purchased MusicCards -- i.e., get them to purchase CDs on an ongoing basis once they have bought the Card? I think the former CCI must have had a substantial problem with "tie ratios": serviced 1.5 million customers in 1997, but sold only 1 million CDs. This purchases-per-customer ratio seems crucial, and I wonder if they mentioned a strategy for ensuring good numbers.
(5) What's Gordon's overall "vision" for the company, say, three years down the line? On this thread, we're so focused on the CD site, and I am glad you spent time reminding us that this is just a small part of the overall business. Where is he trying to take this company? What does he see as the "guts" of his business? You have said he is an entrepreneur's entrepreneur . . . but does he have a specific enough vision to give you confidence that he's trying to reach a particular objective?
(6) Did you ask Mr. Gordon any questions about how he plans, over time, to enhance shareholder value? Does he seem like he'll remain aware of shareholder concerns, and responsive to shareholders?
Thank you again! I'm looking forward to ongoing discussion of your research and the DD others are doing on the company.
Best,
Lane |
