Centennial Technologies (CTN) Message Board

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Technology Stocks : Centennial Technologies (CTN)

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To: aatkinson who wrote (367)	2/10/1997 7:26:00 PM
From: kolo55	of 1959

Inventory writedown causes credibility problem with reported earnings. I agree with you that the book value of this company is almost irrelevant in how investors are valuing this stock. But then you go on and say that sales and income are not effected by reduced valued inventory. Come on! Follow the logic. Over the last twelve months this company has reported great earnings with great margins. They have reported about $9-10M in operational earnings. But now the Financial World article says they ignored inventory losses and implied they are ignoring bad debt (see the increase in Accounts Receivable). So the reported earnings are a "phantom number" that really should be restated. Instead of $9-10M maybe the company only earned $6M accounting for "real" materials costs; or maybe only $3M, if we account for bad debt. And the large margins aren't so large after all. All we know is that inventory climbed almost $12M in six months (from $18M to $30M). And Receivables climbed $18M (from $12M to $30M). These big increases need to be explained by management. The fact is that neither you, nor I, nor the institutions and money managers, really know how much money this company is making! And we won't until the allegations in the article are addressed. The company is ignoring these concerns while issuing a confusing and misleading earnings report. No wonder the Big Boys want to meet with management! The fact that meeting is going to take place, almost certainly caused the stock to trade down. It lends credence to the allegations made in the article. Until we have good financial info, its very difficult to estimate future earnings streams and value this stock. And by the way, the company hasn't released a balance sheet for the last quarter. When I called them, they sent me an analyst's report that contained balance sheet info on the last quarter. What a way to run a company! Finally given all this uncertainty, we saw some big blocks trade today. I suspect some big players are saying "When in doubt, SELL." Paul

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