Schlep, Didn't have time to concentrate on this until now.
I didn't realize that this was a $40 stock in 1995-1996 period. Multex 11/13/99 rates a Weak hold by the three analysts following the company.
99EPS (2.08)E
00EPS (0.22)E Huge improvement
Stock decline since 1996 had one feature of note. Negative cash flow for three years.
169M - Mrkcap
40M - sharesout
Low Price/sales of 0.50. Was 4.07 when it was profitable.
Book value is $4.32
Recent infusion of new institutional blood. #1 is also buying GLIA too.
1 WISCONSIN (STATE OF) INVESTMENT BOARD 09/30/99 3,201,900
2 DIMENSIONAL FUND ADVISORS INC 09/30/99 2,521,300
3 CRABBE-HUSON GROUP, INC. 09/30/99 2,486,564
32M float per MG. This is unusual since only 40M out. Shows what happens when no one wants the stock for years.
Four analysts following per Market Guide, all different views: Strong Buy, Hold, Underperform, Sell. Amazing.
Analyst predict a low of (0.30) EPS for 2000 to a high of 0.20. This is the ballgame for PCTL. Who is right?
More like gambling than anything else.
Out of the last five earning quarters per MG, three were negative surprises which leads me to go toward the negative also.
Incessant babble of PRs that talk but do not say anything.
One insider buying 20K in the last 6 months.
49% owned by institutions is strong since an under $5 stock.
3 Mo. Shares Purchased (Mil) 6.423
3 Mo. Shares Sold (Mil) 5.587
3 Mo. Net Purchases (Mil) 0.836 - This is always a good sign.
Management problems raises a cautionary flag. from the SEC fiing.
"Dear Gary:
This letter will hereinafter set forth and confirm the Agreement
between you and PictureTel Corporation (the "Company") concerning your
employment with the Company and the cessation of such employment. This Agreement
will reduce to writing discussions relative to an effective date and the
conditions of your departure from the Company. As we have discussed and agreed,
it appears to be in the best interests of both you and the Company that your
employment with the Company ceases on September 17, 1999 (the "Separation
Date").
Class action lawsuits
Since September 23, 1997, seven class action
shareholders’ complaints have been filed against the
Company, Norman E. Gaut, then Chairman of the Board, Chief
Executive Officer, and President and Les Strauss, the former Vice
President and Chief Financial Officer, in the United States
District Court for the District of Massachusetts. The plaintiffs
filed a consolidated complaint on February 11, 1998.
The result was:
"On June 17, 1999 the Company announced that it had entered
into a settlement agreement with the Plaintiffs. The Settlement
provides that the claim against PictureTel and Mr. Strauss
will be dismissed. In agreeing to the proposed settlement, the
Company and Mr.Strauss specifically deny any wrongdoing.
The settlement provides for a cash payment of $12 million by
the Company, plus interest, after the settlement is final. More
than 75% of the settlement amount will be covered by the
Company’s insurance.
SEC is involved also:
In May 1999, the Company was informed that the Securities
and Exchange Commission (SEC) had initiated a formal
investigation of matters related to the Company’s 1997
restatement of its earnings. PictureTel has been cooperating with
the SEC and will continue to do so. The Company expresses no
opinion as to the likely outcome. The Company does not believe
that the investigation will have a material adverse affect to its
business, financial condition, results of operations or cash
flows.
Another suit pending:
On June 2, 1998, the Company was served with a complaint
from a former distribution channel customer, Revnet, Inc., which
has ceased operations. (Revnet, Inc., v. PictureTel
Corporation. Civil Action 98092039, filed April 2, 1998,
in the Circuit Court for Baltimore City, Maryland.) The
complaint alleges that the Company breached an oral contract.
Revnet is allegedly seeking $200,000,000 in damages. Discovery is
in process. The Company believes that the complaint and the
claim for damages are without merit and intends to vigorously
defend against them. In addition, after limited discovery under
the above named suit, the Company on September 13, 1999
filed a related action in the Circuit Court for Baltimore City,
Maryland against Revnet, Inc., Vuecom, Inc. (an entity related to
Revnet, Inc.), George Harris IV, George Sandmann and Lou Brown,
(PictureTel Corporation v. Revnet, Inc., et al. Civil
Action 24-C99-004406) alleging among other things Breach of
Contract, Fraudulent Inducement and Securities Fraud. The
Company's complaint is seeking more than $7,000,000 in
damages.
The good news:
On February 18, 1999, Intel invested
$30.5 million in the Company, acquiring approximately 10% of
the Company's equity through convertible preferred stock.
The two companies will jointly develop videoconferencing and
collaborative products based on a common PC-based technology
platform. Use of a single architecture is expected to improve
ease of use and functionality, while reducing both product and
associated support costs. The first of these new products, which
will be marketed under the PictureTel name, is expected to be
available in the second quarter of 2000.
Sounds good, but hurts credibility:
In mid June 1999, the Company resumed shipping Swiftsite II,
a compact system designed for the fastest growing and lower
priced segment of the videoconferencing market, after resolving
performance issues that resulted in suspension of shipments in
the first quarter of 1999.
In summary, this has a downside of $2.50 and a upside of $10 by June 2000. Risk reward ratio is favorable, but this management shuffle in Sept99 bothers me. This breaks up the team that got the 30M Intel infusion. EPS picture is improving, but can it get to (0.10) for the next quarter. That's what I would want to see before I buy so I'll wait until next quarter earnings before I consider to buy. New leadership has to prove itself and a run to $6 by Feb00 is not inconceivable if the team performs. Sounds odd, but I rather wait and pay $6 for a proven horse than $4 for a brand new foal. As for videoconferencing. I been there and am not impressed. I rather just get a video mailed to me. Regular phone conferencing is fine. If on video, Jack has to pay attention even when I feel it is wasting my time (which is 90%). I get the impressions that it a toy not a tool. Talking heads show nothing but words in stream of conciousness. Nominated as one of the most efficent mgrs in my nameless organization and I attend meetings the least. Results not facetime makes the company money.
Hope this answers your question.
Jack |
