Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Command Systems, Inc. (CMND) -- Ignore unavailable to you. Want to Upgrade?

To: JEFF BERRY who wrote (1673)	11/2/1998 5:31:00 AM
From: JDN	Read Replies (1) \| Respond to of 1956

Dear Jeff: Be careful, I am not sure your theory is correct. IF CMND consolidated the offshore entity when 51% was owned seems to me they would have consolitdated it IN TOTAL then shown a minority interest reducing earnings at bottom of P & L statement not throughout. But I am not sure as dont know enough facts and dont have time to investigate. JDN

To: JEFF BERRY who wrote (1673)	11/2/1998 6:01:00 PM
From: JEFF BERRY	Read Replies (2) \| Respond to of 1956

Continuation of Q3 observations: Consider the SGA expenses: Q1....Sales..$7,934,000........SGA expense..$2,157,000 Q2....Sales..$8,697,000........SGA expense..$3,137,000 Q3....Sales..$8,921,000........SGA expense..$3,049,000 During Q2 & Q3, SGA expenses increased $1,872,000 over the SGA expense for Q1. However sales for Q2 & Q3 only increased $1,750,000 over the Q1 total. SGA expense ratio to sales has averaged 29% for full year of 1997, and also 29% for Q1, 98. Thus for every $29 spent on SGA, Command has generated $100 in sales. Based on this historical ratio, Command should have generated a Q2/Q3 sales increase over Q1 of $6,455,000 instead of $1,750,000. On the surface it does seem outrageous that Command would spend an extra $1,872,000 in SGA to generate a puny $1,750,000 sales increase.....Based on Command's average margin of 32%, a sales increase of $1,750,000 only generates $560,000 in gross profit. $1,872,000 expense less $560,000 profit = $1,312,000 loss!?? However I consider it likely that a substantial amount of the $4,705,000 revenue difference is being delayed recognition on the books until projects associated with the revenue are deemed complete. Although Command's new business model with a focus on project orientation will always push project revenues generated with current SGA expense into future Qtr's, the major downside to earnings is reflected during the transitional Qtr's between the two business models. I expect SGA expense to remain close to $3 million in Q4. I also expect that we will begin to see completed project revenue beginning to flow through the pipe line, finding it's way to the income statement. Based on gross profit margin of 32% and an effective tax rate of 19% (derived from taxation rate applied to Q1 earnings.) For every $1,000,000 in increased revenues Command will generate an after tax net of $260k, or approx. 3.5 cents a share. Best Regards, JAB