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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Podsiadlik who wrote (8796)	12/21/2001 2:00:49 PM
From: Sir Auric Goldfinger	Read Replies (2) \| Respond to of 19428

Next up-RVDP today's WSJ Europe: "Riverdeep's Dealings Are Again Obscured by Murky Procedures By JESSE EISINGER Staff Reporter of THE WALL STREET JOURNAL Sometimes there's more to a story than the press release reveals. Riverdeep, a Dublin-based educational software company whose shares are traded on Nasdaq in the U.S., this week announced a marketing and distribution agreement with Pro-Ed, a small, closely held publisher of educational materials based in Austin, Texas. Analysts wrote some marginally favorable notes on the deal. Riverdeep shares rose 3.4% on Tuesday to $18.51, when the deal was announced. Since then, it's given back some ground and was trading Thursday at $16.72. But some information appears to have been missing from the release. The deal closed almost two months ago and involved a sale to Pro-Ed. As part of the agreement, Pro-Ed purchased some of the rights to the print version of the Edmark Reading Program, a program to teach disadvantaged children how to read, according to the CEO of Pro-Ed, Donald Hammill. In an interview, Mr. Hammill said Riverdeep maintained the rights to the ERP software. The two companies closed the deal on Sept. 27, the CEO said. "All the financial arrangements were satisfied," he said last week, before the press release was issued. He declined to comment on how much Pro-Ed paid to Riverdeep, saying only that it was "not cheap." He also declined to provide an annual sales figure for the ERP print program. Asked about whether Riverdeep sold the ERP print program to Pro-Ed, Barry O'Callaghan, Riverdeep's chairman and CEO, said in a written response: "We have not sold all underlying rights to the products in question. We expect the value of this expanded relationship to generate significant ongoing annual revenues. This is my final comment on the subject." [[Go]] Riverdeep's Shares Have Gained, But Firm's Accounts Are Blurred (Nov. 21) When Heard in Europe called Pro-Ed's Mr. Hammill back after the press release, he said his company "bought certain rights to the print product," adding, "For example, I didn't buy the trademarks." When asked why not, he said: "I don't know. Maybe it didn't occur to me." There are a few important questions that occur to Heard in Europe: Why is the company announcing the deal only now, instead of in September? How much did Pro-Ed pay to Riverdeep? And how did Riverdeep book the gain on the sale to Pro-Ed? Mr. O'Callaghan didn't respond to those questions. It is possible that the sale isn't material to Riverdeep. The company, which has a market cap of about $560 million, had $29.6 million in revenue in its fiscal first quarter ended Sept. 30, compared with $4.8 million in the year-earlier quarter and $20.4 million in the fiscal fourth quarter. Excluding revenue from the recent acquisition of Learning Co., owner of such software titles as Carmen Sandiego and Reader Rabbit, Riverdeep only barely beat the analysts' revenue projections. Even a relatively small figure, such as $1 million, could be material in such a case. In addition, Riverdeep didn't mention such a gain in its first-quarter financial results announcement, even though such a transaction would normally be considered a one-time gain. As Heard in Europe wrote in late November, several short-selling hedge funds have been questioning the valuation of Riverdeep. In particular, they have cited the company's high level of accounts receivable. When accounts receivable are very high, it can suggest that the company is extending credit or relaxing its terms to boost sales. The other issue that raised eyebrows was the large provisions Riverdeep recorded for its acquisition of Learning Co. Now there are questions about whether Riverdeep provided enough information about the sale to Pro-Ed. Riverdeep? Maybe they should call it Muddy Waters.