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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (10107)	3/3/2000 10:16:00 AM
From: Bob Rudd	Respond to of 78661

Armin AOR - I had looked at it prior to debacle, intrigued by the orphan brand concept, but didn't buy any. Since the crash to 3's, I looked further & didn't see any huge warning signs in the financials - Cash flow from operations was erratic and margins appeared to dip a bit in Sept qtr, but nothing that would have alerted to this debacle. Currently investors and analysts are waiting for the other shoe to drop - 4 top execs don't hit the door arguing with auditors over timing of accounting treatment of promotion costs - there's more to it than that - probably a lot more. Some folks on Yahoo boards are looking at modest market cap and thinking "It's got to be worth more than that" Which is correct, until you add in the debt - total liabilities nearly $1Billion, most of it incurred buying brands when brands were valued a bit more than currently [Look at Kellogg for example of this]. So the key issues from current investment perspective: What more will be revealed about the accounting [Those of us that have looked at/danced with CD, MAT, & WMI know this can play out over time in stages]. If the accounting is adjusted to reveal owner earnings, is the equity priced with margin of safety after debt is considered. Who's gonna do it - the entire top tier of management hit the door. Investment firms with large stakes are holding the reins - but they don't have the skills to run the busines and so must find a managment team. Since the key to this business is maintaining and building brand equity, marketing skills are critical. If the board picks badly or waits too long, value could be impaired. It's a real shot in the dark - I gotta see more cards, probably still won't play because the debt looks like such a hurdle - could easily see this going BK. bob