Has anyone read the 10K that came out recently? (http://sec.yahoo.com/e/990330/mspg.html) The legal departments of corporate America do a pretty good job of ensuring that enthusiasm is kept to a minimum in these documents, but this one struck me as particularly grim. It didn't do anything to cheer me up.
Here's my possible bad scenarios for MSPG:
*** MSPG gets indigestion from its recent ravenous appetite (SpryNet & Netcom).
MSPG doubled in size during these acquisitions, and the 10K acknowledged this:
- the acquisition may disrupt our ongoing business;
- the acquisition may divert management's attention from our ongoing business;
- we may not be able to successfully incorporate acquired assets and technology into our service offerings;
- we may not be able to maintain uniform standards, controls, procedures, and policies;
- we may lack the necessary experience to enter new markets and add new services; and
- an acquisition may impair our relationships with employees and subscribers as a result of changes in management.
I feel that they will eventually smooth out all the bumps caused by or related to the acquisitions, but it may cost them more than they expected in terms of customer & employee goodwill not to mention good old-fashioned cash. They are short on the latter at the moment.
*** MSPG continues to be silent on the broadband front.
I've heard it said that dialup has a longer future ahead of it than most people realize, but eventually revenues from this source will dry up. In the meantime MSPG has time to find a broadband partner or partners much as AOL has. MSPG is not without options, but its future is unclear. Looking 5 years into the future, how do you think most people will get to their MSPG email accounts? Myself, I honestly don't know.
*** MSPG doesn't find any more good acquisition candidates
I don't know the national ISP market but it is possible that there are no ISPs left with > 10k customers that MSPG would want to buy. That will make it hard to keep up their high growth rate.
On the good side:
*** MSPG has great management
They have brought their company a long way in a short time. I have faith in them and their ability to come up with solutions to the obvious pitfalls I mentioned above and the dozens of problems I haven't thought of.
*** MSPG has a strong Web hosting business
One of the benefits of Web hosting revenue is that it is not dependent on the customer's method of access. In other words, the broadband vs. dialup issue isn't relevant to the Web hosting business. Web hosting accounts for about 15% of MSPG's revenue.
*** MSPG has a good reputation and is a potential buyout candidate
One of the potential buyers I see for MSPG is a CATV co. MSPG has everything a CATV needs to get started in the ISP business -- customers, experience, and a reputation. I would like to see this happen. I think it would be good for both MSPG and the purchaser (and for my stock of course).
My .02,
Mr Bones |
