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Non-Tech : CompUSA (CPU)
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To: blankmind who wrote (1603)3/11/1999 8:56:00 AM
From: Vizzini  Read Replies (1) of 3187
 
my understanding is boston chicken had a greater book value than its share price, and we know where boston chicken ended.

BOST is a different animal. Relying on book value is dangerous if you don't examine what it is composed of. In the case of BOST, they fronted new franchisees, and took back notes. So after a while, their assets consisted substantially of notes receivable from franchisees, and interest income from notes receivable became a significant portion of revenue. Problem was, many of the franchisees were losing money and couldn't pay the interest or principle on the notes. So what was the real book value of BOST? In reality, a small fraction of what was stated.

CPU's assets on the other hand are mostly cash and inventory. Much higher quality than BOST.
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