<CMIC> I talked with CMIC. Here are my notes:
1. Cash:
Divestiture of the low growth defense products will net about $80 million. Of this the plan is to use $20 million to completely eliminate short term debt. $40,000,000 will be used to buy back shares in the company (This was news to me). The rest, $20,000,000 will be used for operating expenses, but particularly focused on establishing market leadership. Which brings us to product channels:
2. Product Channels:
They are currently direct marketing, but the company understands that this is not adequate for a high growth business. They are actively pursuing partnerships with major companies to market their products. They could not tell me with whom, which is understandable, since this is a highly competitive environment. However, we should expect some announcements "in the coming weeks or months".
3. Gross margins:
They expect the margins to be about 40% of sales.
4. Management:
I also broached the subject of management. Nearly the entire executive suite has been changed over the past two years. This is a very different company, focussed strongly on growth. They have a new controller whom they hired from Silicon Graphics, a new CFO who has consolidated all of the finance operations in the company and centralized the operation, streamlining it greatly. This will allow the high growth rate that they require. Their marketing executive is from Motorola.
In summary, this company is making all of the right decisions and has spent considerable time and effort in establishing a strong management team. I have seldom come across a company with better technology that has, at the same time, put in place such a strong finance and marketing team.
I really believe that this company is poised to grow strongly. Of course, I could be completely duped and this company may be a POS. But I don't think so. I try to short the POS companies, not buy them.
-Sword |
