SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Anaxagoras who wrote (2002)11/13/1998 3:47:00 PM
From: Q.  Read Replies (1) of 2506
 
re. VTCH, I looked at the 10k 10Q and DEF14a.

What a bizarre history of financing the corporation. The 20% interest-rate loans from the boss really got my attention. Those are paid off now, but replaced by other really weird stuff. Keeping this co. funded is a real mickey-mouse operation.

re. the cash burn and inventory growth, which some here have discussed, this doesn't really bother me. It looks like it isattributable to sales growth. Generally there's nothing wrong with that. The healthiest co. in the world will burn cash if it grows fast enough.

This is not to say that I like their business model, though. Aside from the risk related to Brazil's economy, I see several things I don't like: For one, the way that they have 3 mos. of inventory in parts on hand in Brazil or in transit. That is really just way too much for a manufacturer of PC's. Not exactly Dell. When business slows, they will be stuck with 6 or 12 mos. of inventory that gets obsolete fast. Plus lots of debt to service isn't good for when things go wrong. They have a highly-leveraged capital structure and very high interest expenses. Fine for rapid growth, disastrous for reversal of that growth.

Agreed, Anaxagoras, that the 80% ownership by officers is not a good thing for squeeze risk. I also don't like to see 1 M shares short out of a small float of 3 M. I enjoy sleeping at night too much to deal with that.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News