Recently someone suggested looking at SPMD, as a company that used new tech like QR codes to help businesses do marketing. It seems like a good niche so I took a look. Here's what I found: (by the way, the Kryptonite is debt.) Reorg in bankruptcy March 2009, went from $9B to $2.75 B of debt, since then has been paying down some debt every quarter, from $125M to $200M a quarter, most recently with about $2.2B of long term debt. Market cap $30M, reflecting the improbability of this 4400 employee company ever paying down its debt in any meaningful way. That's $590,000 in debt per employee. Imagine telling all your employees that they needed to earn $590K over costs to get their company back to zero.
Last EPS was $5.86 on a share costing only $1.50-$2; but only 15M common shares, total earnings of $96 million, total debt servicing way more than that.
Too bad, because it's a great product and a great business model, marketing new media advertising strategies to small and medium sized businesses; but boy did they overleverage. Not the kind of stock I like to own, not even 'speculating for a pop' as one of my gentle readers said once. [more]
This is a simple concept. [more]
In this space, on April 26 and again on August 10th, I told you about Intel - how it was undervalued by cash-adjusted P/E even if it didn't grow earnings at all for the next 5 years. [more]
Someone has to think it through, because Mr Cain certainly hasn't. Let's look at a few unintended effects of 9-9-9: [more]
Not quite malice aforethought. [more]
I don't mean SIRI, Sirius XM radio. Feel free to underestimate them all you want. [more]
One of my heroes has passed away.
So sorry to have been right in my prior post, and right so soon.