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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: allen menglin chen who wrote (13495)	1/22/1998 5:09:00 AM
From: craig crawford	Read Replies (2) \| Respond to of 45548

<< Craig, how about FIBR's buy-back plan, the FIBR's thread mentioned the stock buy-back plan recently >> Hype used by the company to drive up the price of the stock. FIBR doesn't have any money to do a repurchase progaram. They finance their activities through private placements. Sounds kind of strange to issue more shares through private placements to get more money so you can buy back shares. Huh??? There is only one thing you need to look at. Notice that when FIBR was announcing their "buyback" (remember the company can announce it but it doesn't have to actually carry it out) insiders were dumping shares. This is the kind of thing I'm talking about. A pattern of unscrupulous behavior by upper management. Never trust a company that publicly announces a stock re-purchase program (implying that the company thinks their stock price is cheap) at the same time insiders are dumping shares. Dumping shares after the company is 90% off it's highs mind you. From their most recent 10Q The Company's operations provided a cash flow of $344,000 during the nine months ended October 31, 1997, as compared an operating cash flow deficit of $990,000 during the nine months ended October 31, 1996. Wow, a $120 million dollar company with over $100 million in sales and such pathetic cash flow. How about this one: At October 31, 1997, the Company had net worth of $41.3 million, with total assets of $83.2 million. Of these assets, current assets totaled $44.8 million including $3.4 million of cash and cash equivalents, $16.1 million of accounts receivable and $21.2 million of inventory. The Company's working capital at October 31, 1997 was $6.7 million. I don't see much cash flowing to the bottom line, I see large accts receivable and inventory levels. I'm horrible at understanding accounting and such but these numbers don't look good to me. I think this line from their 10Q sums it up. The Company finances its operations and acquisitions from debt issuances, bank lines of credit and security placements. Notice they don't finance their operations from the course of their business because they don't actually earn any money. I know an accounting wizard could analyze their balance sheet and income sheet and tear this company to shreds. Unfortuantely I'm not competent enough to do that. I use other tools to arrive at my conclusion that this company is a fraud. Just read this crap: The Company through private placements of its common stock and convertible preferred stock raised net proceeds of $12.7 million during the nine months ended October 31, 1997 which are reflected in the net cash inflows from financing activities. Warrants to purchase 75,000 shares of common stock at $8.00 and callable warrants to purchase 782,888 shares of common stock at $7.50 per share were also issued in these placements. (See Notes J and K to the Unaudited Consolidated Financial Statements contained in Part I herein which more fully describe the Company's convertible preferred stock and terms of securities placements). The Company through private placements of its convertible preferred stock and its 8% callable, convertible debentures raised net proceeds of $32.4 million during the six months ended October 31, 1996 which are included in the net cash inflows from financing activities. Warrants topurchase 342,021 shares of common stock at prices from $8.13 to $18.00 were also issued in these placements. (See Note J to the Unaudited Consolidated Financial Statements contained in Part I herein which more fully describe the Company's convertible preferred stock and debentures). I don't understand how they can raise so much money through private placements yet have such a pathetic balance sheet. Just in these 2 paragraphs I have found it looks like they have raised around $50 million. Yet they only have $3.4 million in cash and they value the total net worth of the company at $41 million!!! Where did all the money go? Acquisitions? They don't seem to be paying off for the company. If a company wants to make acquisitions that's fine but they can't try to con me with tripling their shares outstanding and losing all that cash they raised. Here the company admits that they couldn't finance their own activities by operating their business: Management has completed the realignment of its various acquired businesses along product and functional lines and is implementing plans which it believes will enable the Company to internally generate funds for its current operations Stewart, Help! You are a smart guy, perhaps you could help me out. There has to be some CPA wizard on this thread that can look at these numbers and dissect them better than me.