Michael, from my recollection, after taking write-downs (costs of acquisitions; layoffs, etc) and writeoffs (good will), both to be completed by June 30 per Randy Ingram (at meeting and during cc), ABTX expects to show a very slight profit after that. Even though they enter less-POTENTIALLY profitable quarters during the fall 1999, still I believe they are looking for minimal profits due to savings from layoffs, sales of excess real estate, capturing of synergies in distribution, etc. Interest expense should reduce as they use proceeds, presumably, to continue to whittle down debt, if not restructure the debt entirely for more-favorable terms (I thought Budd's comments about having a longstanding relationship w/ NationsBank was telling). Ingram made the point more than once that ABTX expects to be on the same Oracle dbase enterprise-wise by 6/30, and can and intends to offer specific guidance to analysts from that point forward. That's important to take the earnings uncertainty out of this stock. They can begin to model better and forcast earnings more accurately, for internal and external use, to make things more stable. I am assuming it's been sheer he** for them not being on similar accounting systems thus far...and explains 1) how they have routinely missed earnings projections, and 2) why they wait until the last day to file, now, for many qtrs in a row. Not saying it's right, or wrong....just trying to understand how they blew earnings so badly. I think Dr Thomas *really* mis-judged the impact blowing earnings so badly would have on both his perceived credibility, and ultimately the stock price. That is to say he didn't give this issue enough priority, and ultimately lost his position due to the fallout (my opinion only).
Bottom line - next calendar year is when I expect for tangible earnings to kick in. Not specifically sure what QTR ABTX is calling for though.
My personal opinion on that matter is this will not be an independent company beyond 1999, and really going out on a limb, by 8/30/99, so the issue of earnings I don't focus on as much. That may be simplistic and naive to some. I thought before, and continue to believe, that the intrinsic value of this company is not in earnings for ABTX's sake, but lies within their biotech and distribution value. If DLP, MYCO, and other more "mature" were still independent, waiting for a suitor, then I would take the position that perhaps ABTX will have to "go it alone" for a year or more on earnings alone while the other deals closed. But now that this *is* the last remaining seed company of any size, they are attractive for reasons well beyond earnings before end of year. You can tell I *still* believe Dr. Thomas' industry predictions were right on target...just could not agree with his execution overall and failure to maintain an acceptable stock price. While I didn't, per se, call for his departure, I can't say I disagree with it now.
When I saw the Cargill deal explode, I was cautiously optimistic ABTX would benefit.
c-man |
