sl -
I respect your opinion, read your posts with interest, and have enjoyed the private exchanges that we have had.
Regarding my so called straw man, I think you are placing my distrust and disgust of the executive team too high a billing. While it is true that I believe the actions of this team have been criminal and irresponsible, it was not my fundamental sell thesis last spring when I first became interested in researching the company and it's leaders.
If you will recall back to those joyous days for CATP shareholders, prior to the dramatic decline, my fundamental sell (or rather sell short) thesis was that the expectations that had been set in the marketplace would not be realized and the stock is way overvalued. This, it seems to me, did prove to be an accurate forward looking thesis.
The fact that the executive team behaved like a boiler room sleaze operation, and had a very poor record of delivering long-term shareholder wealth and satisfaction (see Concurrent), only served to provide more confidence that implosion was a likely outcome.
As the data streamed in each quarter, it became clear that the company's fundamentals were weakening, yet it always seemed to find a way to hit that expectation number (Hmmmmmm !). I pointed out after each quarterly report, the weakness in the data, and it's inconsistency with the continued rosy forecasts by the company and the street.
That is basically how I recall my opinion and I just wanted to add that to the record.
Other Thoughts:
Regarding retention: I believe that key people have left, are leaving, and will continue to leave. I believe that Cambridge is now losing more good talent than it is gaining. I am not talking about the inner circle of Sims and Toscanini (the money guys), or the close-to-the-inner-circle-but-no-cigar recruiting and operations folks in Cambridge; I am talking about management from project managers, practice managers, and regional managers - the one's that are capable of attracting, managing, motivating, and keeping good development talent. As far as I am concerned, key departures at the senior executive level (Sims especially) are exactly what this company needs to try to get to the next level of service and reputation.
Regarding current valuation: In the low teens, with $100 million in the bank, and a revenue multiple close to 1, I believe CATP to be a sound investment. However, even though I have dipped in to buy twice (in the high 20's and recently at 11.5), each time I got cold feet - the first time I just wasn't confident, and the most recent time I just couldn't stomach the idea of my money being cared for by CATP management, regardless of the prospects for rebound or takeover.
Regarding takeover possibilities: I think it is real. I don't think the current team has the credibility or capability to take the company to the next level. A tech workforce of CATP's size and relatively positive reputation (with clients not the street) is a scarce and valuable good and the industry is ripe for consolidation. I have never thought that consulting is a good way to make alot of money, as the variable costs as a percentage of sales are too high. What this means is that economies of scale will rule the day. CATP, once a capable acquirer, is now a more likely an acquirable.
Regarding the reorganization: It was, and continues to be, a diversion from the accounting improprieties that could no longer be masked by strong revenue growth and acquisitions. I don't believe that with conservative accounting CATP would have had the spectacular margins which impressed investors in '97 and '98. The reorganization has been the excuse for the missed numbers - BULLSHIT !
For What It's Worth,
JBD. |
