New Info Regarding SRCM's Failing IT Biz....
From a question on Yhoo...
<<<As for the $12 million EBITDA.. I suggest you do some work on IT and see what is going on with the existing business. sounds like you are in a vacuum !>>>
No I am very familiar with the events at IT. They are stringing you along trying to get you to believe they are going to make big money. Sounds familiar doesn't it? We can go back to the initial launch of the SRCM cable biz in Colorado Springs - remember the story you got then? Yup they made millions didn't they?
WRONG Col Springs was shut down due to lack of subscriber interest. Total failure. SRCM had to write off all the boxes they built. Complete loss.
Next, The buy of VNN and Brite was going to make SRCM the biggest IT provider in the country - buying the second largest IT provider was going to eliminate competition, improve SRCM's margins, make them the only game in town, bring them so much revenue they could service the $120mm debt and be cash flow positive.
WRONG. Days after the purchase over 1/2 of the customers left SRCM and went to IMS. SRCM sued IMS for torturous interference, and sued IMS's founder for breaking a non-compete agreement. This last week that suit was dismissed by the Judge hearing the case. The Judge said there was no non-compete, the torturous interference did not exist. SRCM loses big.
So far, SRCM has lost $25.9 million of the $44.6 million they paid for Brite and VNN - they wrote that off last Q. But that is not the end - more customers are leaving. Of the $44.6 million they paid, I suspect they will lose over $40mm of the value of that business. They never became cash flow positive, they still burn 3-5 million per Q in cash flow losses and now only have about 3-4 Q's of cash left.
What you fail to understand is SRCM also sued two of the customers that left and went to IMS after SRCM bought Brite and VNN. Those two IT customers are several of the largest independent publishers in the country. These publishers all know each other, its a small world in that business. They all talk... Since the dismissal of SRCM's non-compete & torturous interference suits vs IMS by the judge this week, SRCM went begging to these other companies they sued and asked them to settle. They laughed. They want blood and they will get it. So will the attorney's suing SRCM in the class action for the shareholders.
SRCM's reputation in the IT business is terrible they are not respected and are known for very poor service - part of the reason some publishers would not transfer to SRCM from Brite. SRCM is losing many more customers, the IT biz is going to go down the tubes. I suggest you do more research on this subject before opening your yap and spewing the company's hype. Try talking to people in the IT Biz.
SRCM has a history of promising "big profits" just around the corner. They have failed every time in the past and they will fail again now. But right now they desperately need money, so expect new hype stories to pop up, and expect the investors to get screwed like they have every time in the past.
All Comments IMO
Cheers Steve |
