I did not come to this thread for the last few days so I cannot respond to Craig's comment earlier. I do not mind shorts or longs but I want us all to take a proper position based on the correct information and judgement, As Barb mentoned, we should argue on Craig's points if we cannot agree for the sake of new comers.
As I posted earlier, I do not mind FIBR's standing at $5 or $20 but I want that level was based on something realistic, as I PERSONALLY do not see any reason FIBR can be profitable in the coming Q4, not to say a 0.11 per share. We have to be realistic that all of the three stars of FIBR has to come a long way to become a super star, if it can contribute significantly in next Q4, we should thank god. If we have unrealistic expectation, the message we sent to the management is to force them to take a short term but not workable action which can eventually kill our investment.
You have to believe that after you have hand on experience on these three stars, you should believe $284 WILL BE the right value for FIBR someday. But don't dream of a quick turn, it will not happen because all these three stars have to sell-in big corporation, the road from the front gate to the buyers' office have to take a year and there is no faster vehicle except they bribe the business (do we want them to do that?).
Craig has every reason to short FIBR, but the following example he used in his post was irrelevant :(details refer back to his original post)
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>>>In the same 10Q the company says:
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.
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>>>So the company in only 15 months raised over $45 million from debt issuances, private placements, etc yet the whole net worth of the company is only $41.3 million!!! And $21 million of that is listed as inventory!! They had to depreciate about $5 million of that or inventory would have represented closer to $26 million. Another $16 million in "assets" are unpaid account receivables.
>>>Where did all the money go? To acquisitions? So let's get this straight. FIBR has tripled the shares outstanding in the last couple of years yet had y over y sales declines last quarter. Yeah, those acquisitions are really contributing to the top and bottom line. >>
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The conclusion is not correct. The net worth of $41.3 million is the result of its asset $83.2 minus debt (did not mention in this post, but from accounting calculation, if should $41.9m). I do not know why the $45m debt financing in the last 18 months will eventually become a $41.9m balance (it can be repaid or converted into equity), but we cannot use the debt raised ($45m) to compare with its net worth.
If the above figures confuse you, let me use a simpler example :
Par initially put $1m into FIBR, its net worth is $1m ($1m asset, no debt) then Par use FIBR to borrow $5m from Barry, the net worth of FIBR is still $1m ($6m asset, minus $5m debt). The networth of the company will be increased if it earn profit or it issue new shares. The networth will decrease if it loses, distribute dividend or buying back company shares.
>>>Look at the pathetic cash flow for this company:
>>>>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. This increase in net operating cash flow is reflective of the net cash outflow from operations after adjustment for non-cash income and expense of $5.6 million reduced by the net decline in current assets and increase in current liabilities during the nine months ended October 31, 1997. During the nine months ended October 31, 1996 net cash outflow from operations after adjustment for non-cash income and expense was $500,000.
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The 344,000 cash flow has nothing related to "pathetic" . It is only the net of the cash flow in that quarter, meaning is that after spending certain millions and collecting another serveral millions, the net effect is $344,000 net inflow. Actually if you are a cash lover, there was an improvement compred to last year as at that time, the net outflow is 990,000 (but note, it is outflow, not inflow).
Cash for technology companies is important but not critical, if they have great product and they can prove it is acceptable (like approved by NASA), they can easily raise money from capital market. May be the Management do not feel fair to issue the shares to outsiders at such depressed prices (Well, human are selfish, so when they issue shares to themselves at $2.35, they will use other ruler as the market price of the shares dropped to 2 1/16, why should they pay much more than that?).
As long as we interpret the fact and figures as the way they are, the others are just a matter of opinion, if you do not like its cash flow, short it, if you do not like their management style, short it. But if you misinterpret the fact, it will be unfair to someone who do not understand the figures and fact correctly. If you have unrealistic expectation, you are going to kill the company. If you expect FIBR to have 0.11 profit in Q4 so you buy the share at $6, you are going to hurt some of the others when you find out it is not there so you dump it. Although it should not affect the long term investors any how as long as the Managment is not pathetic by this kind of dumping.
CH |
