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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Amigo Mike who wrote (7386)	8/3/1998 8:56:00 PM
From: Cary C	Read Replies (1) \| Respond to of 29382

Here are some reasons to support your addition to your APCO holdings amigo, (posted on the APCO thread) Hello fellow and future APCONIANS, Although the earnings were what I had hoped for I have to say that the price movement of the stock was also disappointing. Some of which was no doubt created by the wonderful market conditions that we are currently experiencing :>( I spoke to Todd this morning. He stated that they were very pleased with July's numbers. I believe the post stating July's Honda sales is indicative of this number. Mr. Dorfman also added during the conference call that Honda had record months with APCO in May and June and also expected the same if not better in July. In reading over the previous posts I would like to add my thoughts on several of the items discussed. 1. Regarding and Allstate downgrade or Banc One missing estimates I believe will bode well for APCO. When sells are lagging the easiest way to generate new business is from penetration to existing clients. 2. Along those same thoughts, dealerships will concentrate even harder to sell customers add on items to help make up for any decrease in car sales ( mentioned here but not yet shown to be happening. Especially given the fact that unemployment numbers remain at all time lows). 3. Even assuming that new car sales slowed, people are always going to need vehicles, if they turn to used cars, the profit margin is a little higher for APCO than on new car sales. So again they benefit. 4. I have a hard time believing that the "perception" that has been talked about on this thread would actually effect institutional or broker decisions. The little guy maybe, but I believe the core of the institutional holders would ignore this. Yet I still can't explain the drop in stock price. Below are my thoughts regarding the conference call that I listened to. I believe some items were reported incorrectly and I submit the following for peoples thoughts or ideas. First the negatives..... ok now that that is over. lol Actually the one thing that I wouldn't mind seeing them do is either institute a stock by back program (especially at these levels) or a dividend of some sort to provide some support for the long term shareholders. Considering that 9 months ago, I think they had approximately 18 million in cash and now have 26.5 million with no long term or short term debt. At the same time I can hardly complain about the incredible job that management has done producing quarter after quarter of record revenues and earnings. I also got the impression from the conference call that management is well aware of the potential that is coming up for APCO and that the stock price will eventually get there and they can use the cash for something else. >>Several times Dorfman mentioned that the Banc One business will effectively double the revenues of APCO over 12 months time.<< Anyone of several programs have the potential to duplicate the current business anywhere from 2 to 5 years down the road. Allstate, Banc One, Manheim, Sonic, etc. >>They are trying to smooth out a typical weak Q3 by offering dealers incentives.>> Actually APCO's 2nd and 3rd quarters are there strongest. Mostly do to seasonality. This year they are going to take their first shot at maintaining the levels of the 2nd quarter in the 4th quarter with incentive and or marketing programs. Mr. Dorfman thought that they had a good shot at doing it this year given the programs that they have coming on line. >>The current quarter was simply core business being executed perfectly. Expect similar performance going forward.<< I believe the above is why they are so excited. Mr. Dorfman stated that they continue to have record signups of dealerships because in spite of the other programs they have , they will continue to do what they do best.... Knock on doors. Record revenues EVEN THOUGH the other programs with Allstate, Banc One and Manheim haven't even really started kicking in yet! Revenues from EasyCare Standard and EasyCare Rental haven't and won't kick in until the 4th quarter of this year. Kelly Automotive didn't start producing until June so they missed the first 2 months of the quarter. Kind of paints a rosy picture doesn't it. :>) There has been some question as to the usefulness of EasyCare Service Provider for the consumer in regards to checking it for when you are to do maintanence , renewal of insurance, drivers license, etc. I agree with this but I also don't believe this is the real intent of the software. The fact that dealers who may even give the software to the person who purchases the car will also be able to add discount coupons hopefully getting repeat business from the consumer. If it is given to the consumer for free, you are providing a valued added service to the customer. Another selling feature for APCO in the dealerships? You bet! The value of Autoconnect....... APCO is going to be the marketing force to the dealers in the market place by offering the EasyCare Service Provider software. I believe this will be beneficial in a couple of ways, first it will give them a considerably easier introduction to dealers that that they currently don't have any relationships with. Secondly and maybe most importantly, I think it will help solidify the working arrangement that they have with Manheim (since Manhiem owns Autoconnect). Given the fact that Manheim is still a pilot program, this can't do anything but help increase the chances of them taking the program nationwide. It was also mentioned during the conference call of the one time earnings from the settlement of the suit with the insurance carrier. This should be accounted for during the 3rd quarter. no specifics were given but I think you will see a one time gain between 300k and 400k which should equate to an additional .02 to .03 to the bottom line. Cary