Michael, Tim,
Help me out here. I don't see much to object to here. Granted, I don't know much about the company, nor am I a wiz at forensic analysis of financial statements, but my first glance doesn't raise red flags.
As near as I can tell, the company has grown fast by acquiring companies, hence has significant good will charges, but also showed significant growth in same store sales (10%, 15% excluding LatAm). They raised a couple of $hundred M in debt, and stopped factoring receivables, hence receivables and debt spiked, but DSO dropped, and is marginally higher than 30 days, and is approximately offset by A/P, which must be on about the same payment cycle. Margins were down Q4, probably the result of the same pressures we're seeing in across the PC industry ... unit sales up with tremendous pricing pressure.
Based on the statement I've quoted from below, I don't see company-specific problems, the same way I do with CPQ, or Dell, for example. I'm not disputing your points, I'm just saying I don't see how they're supported.
Peter
oh, btw, IBM extending them a credit line is no specific red flag to me either, in that that's SOP in the distribution industry. However, as the presumed PC industry slowdown unfolds (a reasonably good supposition), even SOP credit relationships are at some risk. IMO, though, IBM has much, much bigger problems with their credit relationships than this.
<< MIAMI, Feb. 24 /PRNewswire/ -- CHS Electronics, Inc. (NYSE: HS - news),
a leading international distributor of microcomputer products, announced
today that net sales for the year ended December 31, 1998 were $8.5
billion as compared to $4.6 billion in 1997, an increase of 80%.
Preliminary net earnings for 1998 were $90.2 million, or $1.61 per
diluted share, as compared to $48.4 million, or $1.32 per diluted share,
in 1997, an increase of 86%.
For the fourth quarter of 1998, CHS had net sales of $2.9 billion, an
increase of 56% over the $1.8 billion reported in the comparable quarter
last year. Preliminary gross profit increased 50% to $193.4 million in
the fourth quarter of 1998 from $129.1 million in the same quarter last
year, and operating income rose 52% to $53.8 million compared to $35.3
million. Preliminary net income was $26.2 million, or $0.47 per diluted
share, compared to $23.8 million, or $0.45 per diluted share in last
year's fourth quarter.
...
''Same-store'' sales -- those from continuing operations -- were 10%
higher in the fourth quarter of 1998 than a year earlier on a constant
currency basis. Excluding Latin America, ''same-store'' sales on a
constant currency basis increased 15%
...
The Company stated that its inventory management improved to 29 days of
sales in the fourth quarter from 35 days in the year earlier period. As
a result of recording accounts receivables in the balance sheet that
were previously factored without recourse, accounts receivables measured
in days' sales outstanding increased to 38 days from 34 days>> |
