Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : GEAC.....Canadian best kept secret -- Ignore unavailable to you. Want to Upgrade?

To: PlayTheKing who wrote (844)	7/30/1999 8:11:00 PM
From: Serge Collins	Read Replies (2) \| Respond to of 1571

There's a lot of talk about this deal, but it's mostly generalities. Can someone explain the fundamental aspects of the deal. Here are a few unanswered questions: 1. Why go to Europe to make an acquisition? This will only complicate integration. 2. This stock could have been purchased for 42p earlier this year, so why did Geac pay such a big premium? Ignore the revenues, there are many companies out there trading at .02, .03, .04 x sales. Big revenues don't make it a good deal. 3. How profitable is this company? How many profitable quarters have they had in the last eight quarters? Will their business model be a drain on Geac's bottom line? There is no sense pumping up the top line if the bottom line goes negative. It's profit margin that counts, not revenues. 4. How much Goodwill does Geac have to assume if they buy them out at the announced price? How much affect will that have on profitability? 5. What shape is JBA's balance sheet in? How much debt/liabilities is Geac taking on? 6. Will this acquisition mean writedowns in future quarters? and last but not least, 7. Why does this company insist on growing through acquisitions when investors are looking more and more for companies that grow internally? Don't they realize that investors will pay more for a company that can create its own growth rather than one that tries to buy it? (If someone tells me that it is difficult to grow in this software niche without acquisitions, my answer will be -- ah, therefore, it's a mature sector and growth multiples should be ratcheted downward.) Comments on these points would be appreciated. Thanks.