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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: Mike M who wrote (3926)	8/11/2001 1:07:38 PM
From: DanZ	Read Replies (2) \| Respond to of 5582

Excellent and fair response, Mike. Here is my opinion on the stock buy back that I posted on Yahoo this morning. My comment about the 50 companies relates to an article that someone posted on Yahoo about the effect of stock buy backs on 50 companies. The article doesn't even contain basic details such as a complete list of the 50 companies they studied so one can form an informed opinion about the results. A share repurchase program in itself will not automatically lead to a higher stock price. There are many other factors that one has to take into account. A not all inclusive list includes: market cap, revenue growth, profit growth, short interest, market conditions, shares outstanding, management, perceived value, new product releases, reason the stock is where it is, business plan, and the company's execution. For anyone to generalize that a share repurchase is BAD or GOOD without taking into account the big picture, or comparing one company's repurchase plan with another company's without determining why one company's worked and anothers didn't is the ultimate in stupidity. At a minimum, Gum Tech's share repurchase puts a floor under the stock and makes this company an even less attractive short sale than before. People had complained in the past that the company wasn't doing anything to defend its stock price from malicious and manipulative short selling that has in my opinion, driven the price way below where it would be trading otherwise. The company believes that the stock is worth more and they are doing something to increase shareholder value. That is good in my opinion and there's no way to spin it otherwise. Whether or not the share repurchase results in a long term sustainable increase in the stock price revolves around what the company does fundamentally in the future. It is my belief that they have other things working, that in conjunction with the share repurchase, will result in higher shareholder value than would be realized if they don't buy back any stock. Instead of posting irrelevant generalizations about 50 companies that bought back stock, why doesn't someone spend time to determine why they worked in some cases, and why they didn't work in others. That is the only honest way to approach this. I have drawn parallels between K-Swiss and Gum Tech before, and this just adds to the similarities. KSWS experienced an inventory correction in the retail channel in 2000. Retailers had too much stock and there was consolidation in the athletic shoe retail segment with a few large companies merging or filing bankruptcy. K-Swiss's wholesale sales flattened while retail sales increased 100%. The stock got hammered from the mid 30s to 10. The company announced a stock repurchase program and actually implemented it, buying back their stock. Sales continued to increase at the retail channel, the company announced new products, wholesale sales followed, and the stock made it all the way back to the mid 30s. There are many parallels between that situation and the one facing Gum Tech. The inventory correction in Zicam is similar. Retail sales of Zicam are growing at a similar rate (100% year to year) like KSWS shoes. Both companies announced a stock repurchase program. Assuming that Gum Tech buys stock and this is the low for the stock, both companies would have bought stock at the low coming out of an inventory correction. If sales of Zicam continue to increase at the same pace and the company announces new products that sell, a strategic acquisition or merger that leads to higher sales, or launches nicotine gum, the share repurchase will be very successful in my opinion. If they don't do at least some of those things fundamentally, the share repurchase won't be as successful. The ball is in the company's court. They are taking the right steps to increase shareholder value. This is all part of a bigger plan in my opinion, and they are doing it at precisely the right time. I don't see how anyone with a rational head could see it differently. A good weekend to all.

To: Mike M who wrote (3926)	8/11/2001 7:56:00 PM
From: Mark Marcellus	Respond to of 5582

I don't remember reading that they planned to buy in the 8's. I doubt management will in fact buy back much of the stock So management is either planning a buyback if the stock price goes down, or more likely they're blowing smoke about the whole buyback thing? Maybe I'm missing something, but I fail to comprehend how you're able to see a possible short squeeze based on those assumptions. I guess you're "thinking outside of the box" again. The interesting thing is that they have an awful lot of cash right now. Much more than they have ever had...and they aren't very capital intensive. It remains to be seen what they really use their cash for One thing they haven't used it for is advertising support for Zicam Allergy Relief. Have they already thrown in the towel on that one? If not, why are they not supporting the brand now that they're awash in cash? I actually agree with you that now is not a good time to be short. If you're going to take a cynical view of this company, the most likely scenario is that they throw lots of advertising money at Zicam Cold Remedy this fall, and try to do a Quigley style product blitz during cold season to be followed by a Quigley style stock runup. It would be wise to wait and short when, and if, that happens. Think about that one Mark. Wouldn't be much point to selling the stock to Wrigley in the first place If I am to take at face value the company's implied claim that their stock is undervalued, what was the point of selling that stock to Wrigley? And once they've done it, what's the point of a buyback? Either one or the other of those actions was stupid, or there was some sort of hidden (manipulative, most likely) agenda.