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Pegasus Falls to Pieces

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May 09, 2007 – Comments (28)

Things have gotten much worse for our old friend Jasper Knabb.

28 Comments – Post Your Own

#1) On May 09, 2007 at 3:03 PM, TMFBent (99.80) wrote:

Update: some other Pegasus employees say "everything is cool."

No one addresses Knabb's whopper about the $700 million in cash, alas.

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#2) On May 09, 2007 at 7:37 PM, gtsmith0928 (< 20) wrote:

Seth.....you might want to write an article about this news story or is there a requirement to have all of your news stories about Pegasus be negative?

http://freeport.nassauguardian.net/national_local/304369879107019.php

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#3) On May 09, 2007 at 7:40 PM, TMFBent (99.80) wrote:

That is not only predictable, I'm sure it was orchestrated by Knabb.

I haven't been wrong about old Jasper yet. His whopper about the $700 million in cash proves that he's up to no good.

Care to bet on it?

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#4) On May 09, 2007 at 7:54 PM, TMFBent (99.80) wrote:

I see from your profiles that you've yet to make a single caps pick or a single board post.

Welcome to the Fool.

Now, as you seem to have some interest in this company, here's a challenge for you: Explain to us all why you think someone with Knabb's history of failure deserves the benefit of the doubt here.

Regards,

Sj

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#5) On May 09, 2007 at 8:46 PM, pdehne (< 20) wrote:

As to that last post of yours, Seth...at the moment, no one is providing me a paycheck for my 'explanations', whereas you DO get paid for yours...so why are you asking your readers, to do your 'fair and balanced' research FOR you? I just don't get it!  BTW, I have no profile for your perusal.  I am 'afraid' that you will find fault with my 'non-worthiness' as you did whomever you were addressing above.  As this stock has come up on my radar, however, I too wondered why you were not as diligent in providing the 'other' side of the story, regarding the Pegasus employees, and why you even failed to mention that one of them admitted to lying to the press because of 'emotion'.....AND I am wondering why you are assuming the $700 that was given, was IN FACT not a typo, or a misquote..Did you even check it out with the newspaper reporter?  If not, why not?  Is it your modus operandi to parrot what you read,  especially if it does not seem plausible, without checking for errors?  Hey!  If you want to twist the knife just for the fun of it, you ought to make sure that at LEAST, you are stabbing the appropriate target for their error....instead of assuming there IS no error, other than Knabb!  I do not stick up for him, but I have a problem with your attacks, as well.  So, from my perspective, you and Knabb are very much alike--

 

 

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#6) On May 10, 2007 at 11:40 AM, BroadwayDan (98.40) wrote:

Hey Sj,

I love these posters who have no profile, who do not value contributing to the Fool unless they are paid, who put lots of all caps and exclamation points to add unecessary emotion, who put quotation marks around words for no reason, and who can't seem to grasp the fact that you are an analyst, paid primarily to help people decide whether a stock price will go up or down.  You said Pegasus would go down, and it has, several times if I'm not mistaken.  Also, of note, I see these folks are woefully misguided by the absurd notion that an analyst has any requirement to be balanced.  If a company has a tumor the size of an eggplant, there is no reason to write something balancing, like perhaps that the company has really nice feet.

HD   

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#7) On May 10, 2007 at 1:27 PM, pdehne (< 20) wrote:

Well..now...those are fightin' words, too, aren;t they?  Hey, guess what?  I have given Motley Fool my money for the past several years, to purchase subscriptions to their various newsletters....and so, I guess you could say, I am a Fool!  But one who is a beneficant of my money, ie Seth, IMO, SHOULD provide a worthy, and COMPLETE, 'story' to the paying public, wouldn;t you say?  As a subscriber to the Fool, I must say, that I have NEVER before experienced such blasphemous words, as Seth seems to enjoy spitting out...about any company, or any person, written by any of the other authors of the Fool that I am familiar with.....and you would be correct in your assumption, I do not pay for 100% of the publications, and therefore, may have lived a sheltered existence within the Fool realm. I have read several of Seth's articles now, re this company....and forgive me for saying so...but it seems he is getting paid by APPL, instead of the FOOL's!  I hold no shares in Pegasus, but because it was suggeted I take a look at the Fool articles....I am now wondering whether I should continue paying for a subscription to this 'outfit' as it is becoming more and more  like some of those OTHER pump and dump scam newsletters... The Fool authors USED to be humorous while still acting like 'ladies' or 'gentlemen'...

 

 

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#8) On May 10, 2007 at 1:39 PM, pdehne (< 20) wrote:

What really concerns me, as well, is that Seth, in his 'wisdom?", seems extremely one-sided in his opinion, chosing to ignore ignore what does not back up his opinion...you know, I started wondering about that.  How could an organization, such as the Motley Fool, allow it's writers an open door available to other newsletters, those that are being sued all the time (AGORA) for misleading people away from the complete picture?  Providing info is one thing, attacking is another, and could get you into court...especially when publishing something without the research to back it up---I refer here to the $700 million in the bank...why didn't Seth verify that?  Is it because he is so intent on destroying this company, at the expense of the shareholders, I might add....that the facts are no longer relevant?

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#9) On May 10, 2007 at 3:02 PM, ctmedic00 (88.64) wrote:

Just so I could go on record... I suggested that people without 7 picks be restricted from comments and the like because of stupid comments that I recieve to my pitches.  Of course I was shot down and hassled by a certain admin for being "incivil". 

 to pdehne.... There is no analyst out there worth anything who says "well it could go either way".  Analysts make calls. The lawsuits generally are realted to things like a certain ML analyst saying BUY to investors and JUNK to the internal IB guys.  That is wrong and unethical.  TMF doesn't do underwriting of stock deals and then let the analyst pump in a booster shot of buy juice to make sure that the IPO holders can get out with profits intact so they'll buy the next IPO.  TMFBent has opinions and often he's right.  It's a free world and everyone is free to disagree.  Unfortunately you are hoping that he'll join in the up parade when the bad outweighs the good.  That's like saying hey the house is on fire... that basement is going to make one awesome swimming pool.  I'd rather hear about the fire if present because that is most beneficial to me.   

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#10) On May 10, 2007 at 3:21 PM, pdehne (< 20) wrote:

Perhaps my point was not clearly stated by me, in a way that my point can be understood.  This whole debacle seems like a vendetta...rather than an analysis.  Comprende'? 

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#11) On May 10, 2007 at 4:17 PM, maverickpl (78.66) wrote:

Not to completely agree with this guy, but Seth does write articles that are very critical. I wouldn't say any of them are unethical or even untrue, but some do come off as fanatical. This sounds like a case of beating a dead horse.

 

Having said that, I like most of his stuff and he finds a lot of junk that is great for gaining some quick points in CAPS.

 

Furthermore, pdehne, you're completely off base when you accuse Seth of "[seemingly] getting paid by APPL". He's a die-hard MSFT guy. He'll probably even tell you that the Zune is going to eventually be a success, so to accuse him of being an APPL guy is simply blasphemy.

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#12) On May 11, 2007 at 5:15 PM, TMFBent (99.80) wrote:

"He's a die-hard MSFT guy. He'll probably even tell you that the Zune is going to eventually be a success..."

Search for an article called "Microsoft's new paperweight" and you'll see what I think the Zune's chances are. I have one, wife loves hers too, but that doesn't change the reality of the player's market fate.

To get back to the matter at hand, I find it odd when posters with no history of providing their opinions whatsover read one of my articles and decide that I should "balance" it by pointing out the pumping side of the story.

To catch up anyone who's been asleep at the Pegasus switch, I was warning people to stay away from this pile of dreckwhile they still had money to save. I wrote many articles explaining exactly why, and I've yet to see a decent counter-argument.

I'll change my mind on Pegasus when the facts change. I double dog dare anyone here to defend Knabb's assertion that the company's got "$700 milllion" on the balance sheet. That's not just wrong, its ridiculously, ludicrously misleading.

I will scream until I'm blue in the face about stuff like this, even though Pegasus is now worthless, because it's only by reminding people that we did indeed tell them so that maybe, just perhaps, we'll get them to pay attention when we have to point out that the next naked emperor in fact, has his doodad's showing.

Personally, I think I like that "7 picks to play" idea as far as commentary. It would raise the bar just a bit.

And as for our paying customer's paying for my writing -- I've written thousands of words on Pegasus. If you don't like them, sorry.

If you wish me to change my mind, then YOU need to present me with some reasons as to why I should. Start with Knabb's whopper about the balance sheet, if you would. Then you can move on the the rationale for moving assembly to Grand Bahama. Finally, please assess for us the market for that product of theirs (the one that, judging from Pegasus's own product photos, doesn't even have high-def outputs) in  face of superior technology from established, deep-pocket competitors.

Sj

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#13) On May 11, 2007 at 8:44 PM, apalus (< 20) wrote:

I have read all of your thirty or so articles attacking Pegasus and its executives during the last nine months. I am wandering why you are still so interested in attacking this small technology company that has a market value of less than $8M. You were right nine months ago, Pegasus was overvalued at $500M market value. Do you think it is still overvalued at $8M?

2006 annual report of the company shows $9M working capital (including $2.2M line of credit), $2M of which is cash. Their long-term debt is less than $0.5M. So, the current market value is less than the value of working capital. Pegasus' annualized revenue growth, after all mergers, was over 30% last year. They had over $100M revenue in 2006 and reported five consecutive quarters of positive operating profits. Also, Cynalynx sales are not included in 2006 revenue numbers and should provide additional growth in 2007.

Pegasus owns 87% of OTC Wireless, 51% of Amax, 51% of Cnet, 51% SKI and 100% of MacControl. All of these companies are debt free and have positive operating profits. Do you think the current $8M market value of Pegasus is high compared to the sum of the values of all these companies?

Let's talk about their new product, Cynalynx. It is not a pretty looking box. The remote control is hard to use and it is not compatible with some PC's. But, the core technology, the uncompressed real-time wireless streaming, works well. Cynalynx can also access internet and stream youtube videos in real-time to a TV monitor without using a PC. There is no other product in the market that can do that. Cynalynx competitors like AppleTV cannot even stream video files in real-time from a PC to TV. In addition, AppleTV does not work with non-Apple computers and CRT type TV monitors. Let's assume that Pegasus cannot compete in the consumer market against big competitors like Apple, eventhough they have a superior wireless streaming technology. Couldn't they licence Cynalynx technology to TV manufacturers or other consumer wireless product manufacturers and marketers and focus on direct marketing only in commercial markets?

Can you give us an objective analysis of Pegasus' business, instead of constantly attacking its executives, and a valuation of the company based on sound financial analysis?

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#14) On May 12, 2007 at 9:31 PM, pdehne (< 20) wrote:

Now, apalus has provided an excellent analysis of the company.  Straight and to the point, and 100%  verifiable as correct.

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#15) On May 14, 2007 at 9:06 AM, maverickpl (78.66) wrote:

Guess, I didn't catch that article. I remember reading a couple articles before the Zune came out and then just after it came out where you mentioned that you had one and enjoyed it. I was really taking a cheap shot at the Zune rather than at you.

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#16) On May 14, 2007 at 10:02 AM, TMFBent (99.80) wrote:

Now, apalus has provided an excellent analysis of the company.  Straight and to the point, and 100%  verifiable as correct.

Actually, most of what he said is verifiably incorrect. But rather than point that out, I challenge you folks to actually bring the numbers out, rather than stating things that aren't true.

The value of this company is zero. The analysis is simplicity itself. It's burning cash, has no hope of getting more, and is hyping a single product with no hope in the market place. Finally, the CEO has a history of pump-and-dump wireless disasters that are indicative of his lack of skill (or worse).

Care to tackle any of these issues? Or do you just want to hope to change my mind by not liking my opinion?

Hint: that won't work. Bring numbers.

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#17) On May 14, 2007 at 11:42 AM, apalus (< 20) wrote:

All of the revenue, operating profits, working capital and subsidiary ownership numbers that I quoted are disclosed in 2006 annual and quarterly reports of Pegasus. Are you suggesting that Pegasus' audited reports filed with SEC are incorrect?

Let's talk about the issues that you raised: 

You state that the value of the company is zero. Where did you get this data. 2006 annual report filed with SEC shows a book value of $24M, $9M of which is working capital. Show us your financial analysis that brings this value to zero.

You state that Pegaus is basically a single product company and this product has no hope in the market place. 85% of Pegasus revenue comes from Amax. Amax is a system provider to commercial customers and its business is not affected by Pegasus' new product Cynalynx. The remaining 15% of $100M sales comes mostly from several commercial OTC Wireless products and technology licencing agreements. Cynalynx's contribution to $100M Pegasus revenue in 2006 was zero. So, how can you say that without a successful Cynalynx product, Pegasus would have no business.

You state that Pegasus is burning cash and no hope of getting more. 2006 annual report shows that, Pegasus increased its cash position by $797K in 2006. $6.421M was provided by financing activities. $2.9M was used in investing and $2.708M was used in operating activities, $1.991M of which were for services to be used in 2007. Company operations were profitable and provided $613K to 2006 cashflow. Do you think this cashflow performance is bad for a company that generated $100M revenue in 2006 with over 30% revenue growth and that introduced a ground-breaking wireless streamimg technology in the fast growing home entertainment market.

You did not answer my question. Why do you think Pegasus cannot licence the Cynalynx wireless streaming technology to home entertainment hardware and software manufacturers? They are already doing this with their previous wireless technology products.

Let's stop personal attacks on company executives and focus on the business of the company.

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#18) On May 14, 2007 at 1:37 PM, pdehne (< 20) wrote:

what is interesting about the posts by TMFbent is that he asks for numbers, blind to the numbers provided by apalus, those very numbers filed with the SEC, AND he fails to provide numbers himself, to back up his rebuttal!  I just looked at the 2006 filing that apalus is referring to, and it appears that apalus is correct.  I have just verified for myself, as TMFbent COULD do if he chose to do, but it seems he does not WANT to do so, as it would interfere with his justifications for attack on, what, KNABB?.  

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#19) On May 14, 2007 at 3:13 PM, hugo4 (< 20) wrote:

Q1 figures will be out soon, so then we'll know if Pegasus Wireless is still worth something or not. We will also know if Seth J. was right or wrong.

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#20) On May 14, 2007 at 6:40 PM, TMFBent (99.80) wrote:

"We will also know if Seth J. was right or wrong."

Uh, my 100 + points on Pegasus already prove I was right about this, in spades. Take a look at a chart, hugo4. (Yet another pickless, commentless player, and I suspect a 2nd sock puppet set up to troll on Pegasus...)

But there are FY numbers to check, as well as that whopper knabb told about the $700 million on the balance sheet. Care too look at those?

As for pdehne's contention that I haven't looked at the numbers at Pegasus, a quick search of our site will prove it wrong.

Give it a try, pdehne. It's new, it's from google, it works, and it'll show you what you're missing. (Some of it, anyway.)

As for the FY numbers apalus provides, they're cherry picked to hide the obvious. Pegasus is a cash burner and only increased its cash position by selling shares. It runs a business that gets 1.3% operating margins on its way to a negative free cash flow margin of (2.9%). Pegasus is cash flow negative even before you look at Capex. ("Do you think this cashflow performance is bad for a company that generated $100M revenue in 2006") Yes, I think that's TERRIBLE performance. Grocery stores do better.

As for "book value,"  what do you think that "book value" is made of? Hint: lots of it is "goodwill," meaning the overpayment Knabb made for his acquisitions. In fact, it's nearly 1/3 goodwill. Then, there's another $7 million worth of "intangible" assets, whose real value may be zilch.  And hey, where's that $700 million Knabb says they've got?)

As for the so-called "growth," it's all a smokescreen because Pegasus paid inflated prices for 51% of two low-margin computer outfits and is in a legal tussle with the prior principles.These were purchased for show so that Knabb could show some kind of revenue growth, but what he acquired is completely unrelated to the networking story he's been trying to sell.

As for the possibility of "licencing" the rerun video networking product, if you believe that's likely, then you tell us why. Don't say "it's likely" then ask me to prove it wrong. If you think it's going to happen, bring the evidence. I suspect you don't because there isn't any.

There are already dozens of home networking products out there from big players, and they don't need Knabb's years-old technology. If they did, they'd have bought it long ago.

As for "personal attacks" on the CEO, they're not attacks, they're truth. This guy ran several pump and dumps in the past and ran this stock up to a split-adjusted $90 a share before reality took it down to where it is today. Knabb bears full responsibility for losing that money for investors, as his stories have not panned out, and he has continually changed them when he needed new excuses. This is as sure a zero as I've ever seen. And it's almost there already. 

Any more questions?

(Crazy prediction, tomorrow, we see yet another new user with no picks and no commentary history show up to defend Pegasus...)

Sj

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#21) On May 14, 2007 at 10:00 PM, apalus (< 20) wrote:

Let's have an intelligent discussion based on facts, and please stop attacking readers of your column who come here and question your logic  and motives of constant attacks on Pegasus and its executives. You published thirty or so negative articles  on Pegasus full of personal attacks over a short period of nine months. Is this supposed to be part of the advisory service that Motley Fool provides to public?

You are still talking about $700M cash in Pegasus balance sheet as quoted by Bahamas press. Did you bother calling Pegasus or Bahamas press to confirm this number before you decided to publish it in your article to label Knabb as a liar?  Is it ethical for an investment journalist to attack company executives with unverified data from questionable sources.

Now, lets' talk about facts backed by published and audited numbers and by sound financial analysis, not by baseless personal opinons.

You state that all Pegasus growth came from acquistions. This is incorrect. Pegasus completed the acqusitions of Amax and CNet in December, 2005 and SKI in January 2006 and did not have any other revenue contributing acqusition since then. Pegasus' quarterly revenues in 2006 were as follows:  $23.1M in Q1, $24.5M in Q2, $27.1M in Q3 and 28.4M in Q4. The sequential revenue growth numbers were  39.6% in Q1, 10.2% in Q2, 6.6% in Q3 and 5% in Q4. Some of this 72% annual revenue growth in 2006 came from the SKI acquisition in January. To be conservative, if we exclude the 40% Q1 growth and take the revenue growth during the last three quarters of 2006 and annualize it, we get an annual revenue growth of 31%. This is the organic growth generated by Pegasus without the new Cynalynx product that you do not like. What's wrong with $100M revenue, 31% revenue growth and 1.3% operating profits? At $8M market value, Pegasus has less than 0.1 sales multiple and less than 0.5 book value multiple. There are thousands of other US companies listed in Nasdaq and New York stock exchanges with less growth and negative operating profits and they trade at market values higher than several multiples of of their sales and book values. Do you consider all of these fast growing companies less valuable than grocery stores and that investors should dump all of these stocks?

Pegasus assumes a $6.9M intangibles value in their balance sheet for OTC Wireless, Amax, Cnet and SKI combined. So, you think this valuation should be zero and these businesses generating $100M revenue with over 30% annual revenue growth are worthless.

Pegasus assumes a $7M goodwill value for their wireless streaming technology. What is wrong with that? Most companies have a small goodwill in their balance sheets for their technology assets.

You want examples of wireless technology licencing deals that Pegasus has.  Here are some examples: Wireless Internet, Nippon Telephone and Telegraph-ME Group, Showa Electric Cable Company and Dlink. I am sure there will be more licencing deals as many home entertainment wireless products come to market later this year.

You talk about many other better technologies in home entertainment wireless networking business. Show me a technology other than Cynalynx that wirelessly streams uncompressed real-time video and audio from a PC to a TV monitor. Apple technology transfers compressed video files first to the AppleTV hard disk and then converts them to a TV format. Netgear licenced a technology that uses electrical wires to do this. Show me a technology other than Cynalynx that enables full internet access directly from a TV monitor without using a PC.

Provide us with investment advice backed with hard data and sound financial analysis,  not  baseless subjective opinions and personal attacks on company executives.

 

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#22) On May 14, 2007 at 10:07 PM, pdehne (< 20) wrote:

GEE WHIZ...I did not know that one was gifted with insult as a perk for posting on this board.  do you insult ALL the people that post on your blogs?  Doesn;t matter to me, actually, I am not emotionally attached to this stock, or being RIGHT at the expense of 'the facts'.  As you recall, I was only wondering why you were fanatically going out of your way to destroy J. Knabb, rather than reporting on the company Pegasus. 

 

Your high-strung and repugnant attacks on Knabb and Pegasus, as I look at all of this, may just very well have CREATED the downslide of the stock---not the other way around.  GHEEZ, just remember...you do not have to degrade or downgrade me, because I am not a company that offers stocks for sale...so you cannot destroy me with your words.   

 

 

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#23) On May 15, 2007 at 4:38 AM, ikkyu2 (99.14) wrote:

S.J., you just keep on spouting your particular brand of "blasphemy."  Your faithful disciples - me among them - will keep the holy water boiling!

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#24) On May 15, 2007 at 3:53 PM, TMFBent (99.80) wrote:

Sorry, apalus, you're making less and less sense the more you try and promote Pegasus.

It pains me to point out all your errors, but it will be an instructive exercise for you, anyone who happens to drop by and be momentarily blurred by your verbiage, and we might as well get it down for posterity.

You bragged about the book value at Pegasus. I pointed out that 2/3 of it is fluff, and possibly completely worthless.Your response suggests you don't understand the concepts of goodwill and intangible assets very well.

"Pegasus assumes a $7M goodwill value for their wireless streaming technology. What is wrong with that? Most companies have a small goodwill in their balance sheets for their technology assets."

You are confused.

Goodwill is the amount you pay in excess of the assets of an acquisition. Pegasus has some $7 million in Goodwill from acquisitions that have not yet proven to be worth anything -- as they have been low-margin revenues that have not provided free cash flow). This amount is separate from intangible assets. That's yet another $7 million.

Goodwill is periodically "tested" for impairment, so unless Knabb and his bookkeeper decide to fess up about the real value of that "goodwill," (in my estimation, worthless) it will stay on the books as being worth $7 million. That doesn't mean it's actually worth anything. It's simply an artifact of what Knabb paid for those acquisitions, clear? That's why you are building a case on a sandbar if you hope to justify Pegasus's value on "Goodwill."

We've already discussed the crummy, negative cash flows and the margins. I expect you've seen the light on that, as you didn't bring it up again. So, perhaps we agree on something.

Alas, you are completely mistaken in characterizing Pegasus's revenue growth as "organic". It all came from acquisitions. Even Knabb admits that. From the 10K

"The increase in revenue is a direct result of the acquisition of the subsidiaries."

Got that? Fine. Moving on:

You seem to believe that the Cynalnikcks (or whatever it's called now) is a groundbreaking technology, yet you have never made a case for either its technology nor consumer demand.

And I don't blame you, after all, Pegasus doesn't say it spent anything on research and development in the past year (aside from reportedly acquiring some in one of its acquisitions), and its official R&D policy reads as such:

"Research and Development

"The Company conducts in research and development on an ongoing basis in order to improve our current products as well as to develop new products. We do not have a specific plan of research and development at this stage."

Yet you continue to try and convince us that the product has a great future in licensing. Your evidence for that is:

"You want examples of wireless technology licencing deals that Pegasus has.  Here are some examples: Wireless Internet, Nippon Telephone and Telegraph-ME Group, Showa Electric Cable Company and Dlink. I am sure there will be more licencing deals as many home entertainment wireless products come to market later this year."

Must I point out that this is also untrue? The 10K makes absolutely no mention of any licensing revenues whatsoever. You are misrepresenting an already slippery-worded section of the 10K, which tries to imply that pegasus has loads of customers, but which uses funky verb tenses to obfuscate just who might actually be a current customer. Here's the truth, with the funkified verb tenses bolded so others can see how strange they are:

The Company has been delivering products to customers since 1995, both domestically and overseas. In addition to system integrators, value-added resellers and end users worldwide, the Company also offers products to major account customers who either bundle Pegasus Wireless's solution to their own products, or carry Pegasus Wireless's products under their own names by private labeling or OEM custom-designed products from the Company. Over the years, the Company's major account customers include our largest Japanese customer, CallUS Computers, which private labels our wireless technology products to Wireless Internet, (WI) and Nippon Telephone and Telegraph-ME Group, (NTT-ME). The Company also is a direct supplier to Showa Electric Cable Company (SWCC). In addition the Company is also the direct supplier of its products to, among others, Smart Technologies of Canada, Lexmark and Dell in the U.S., and D-Link, a major worldwide network equipment provider based in Taiwan, each of which private label our technology products through their distribution networks.

Note that the words "Dell" "showa" and "Lexmark" (to take just a few) appear nowhere else in the filing, as we might expect say, in a revenue breakdown. The word "d-link" does make another appearance, but only as a competitor in the risks.

It's my belief that Pegasus doesn't actually supply any of these companies with products currently, other than some amount so trivial that it isn't deemed worthy of itemizing in the annual.

But let's get back to the core of this. Assuming you are making these flimsy arguments with good intentions, they reveal a deep inability to see the reality of the financial situation.

If you expect to be taken seriously with these arguments, you could start by getting the facts right. The next step would be interpreting them in a way that was consistent with reality, rather that just grabbing whatever verbiage seems to suit your point of view, regardless of its relevance or applicability to the point in question. Finally, there's the question of price. I say a cash-burner like this is worth zero. If you disagree, make a supported argument (using real figures) for an alternate price.

Better yet, use Caps to prove to the rest of us that you know what you're talking about when it comes to analyzing stocks and picking winners.

The rest of us here have records on Caps and on the boards for everyone to judge. I wish you good luck in creating one of your own.

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#25) On May 15, 2007 at 10:31 PM, apalus (< 20) wrote:

TMFBent, I showed you with hard data taken from the audited financial statements of Pegasus that they had 31% annualized organic revenue growth during the last three quarters of 2006, and your response is an unrelated Knabb statement from some other part of the 2006 annual report. Just show us what part of the revenue growth during the last three quarters of 2006 came from new acquisitions. The answer is zero. There was no revenue contributing acquisitions since January, 2006.  Show us with audited data that there was no organic revenue growth in 2006.

I proved my point about the cash flow issue with audited data taken from the annual report. You responded to it with your subjective opinions. A $100M technology company with 30% annual growth needs cash to fund this growth. Pegasus achieved this growth with only $5.8M financing, $2.9M of which was used for new investments. You can bash this cash flow performance all you want. The truth is there are very few start-up companies in the US that can achieve a $30M organic annual revenue growth with $2.7M cash spent in operating activities.

Let’s talk about the $24M book value. I don’t really care what it is, because the book value does not represent the real value of Pegasus’ assets. My key point was that $8M market value is less than the $9M working capital of Pegasus. So, investors are paying nothing for the other assets of the company. Do you know what working capital means? You completely ignored this fact and changed the topic to intangible assets and goodwill. You are trying to teach me what “Goodwill” is. Don’t bother. I have more expertise in financial analysis than the entire team of analysts who are helping you with your columns.

You still have not answered my question about the Pegasus’ Cynalynx technology. Show me another wireless product in the market place that provides internet access from a TV monitor and displays a youtube video in real-time without a PC. Ask your team of analysts. Let’s see whether they can help you with this question.

Let’s talk about something that is really puzzling. So far, you have said absolutely nothing about the 10 million shares that Pegasus had to issue during the last two quarters to satisfy a $514K convertible debt that they did not know about until six months ago.  It is very surprising to all of us who read your thirty or so articles fiercely attacking Pegasus executives during the last nine months that you are totally silent about this strange transaction which diluted Pegasus share count by 42%. What is the reason for your silence?

 

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#26) On May 22, 2007 at 3:49 PM, TMFBent (99.80) wrote:

Apalus, you can't be helped. You refuse to see facts. It's clear that you don't know what you're talking about, nor do you even remember what you claim you were talking about a couple of posts away.

If you're interested, take a look at the latest quarterly filing in which the boneheads at pegasus don't even get the dates right in their financial statements.

First class outfit you're pumping here.

As for the cynalnx, it's a non-product solving a non-problem. Who *wants* to see youtube videos on their TV? Who needs to stream a DVD from a computer to a TV when a DVD player is $35? If you think this product has a future, explain the market, because no one but you and Jasper Knabb seem to see one.

Finally, please make a few picks in Caps. Some of us would love the benefit of your "expertise."

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#27) On May 22, 2007 at 10:47 PM, pdehne (< 20) wrote:

hey there!  Just caught up on the reading, and wondered if the moderator of the board knew that CD's and DVD's, as we know them today, were being 'phased out' ---which explains ONE reason the DVD players are so cheap.  And one more thing, A follower of Microsoft, who ALSO listens to Bill Gates, like at, ohhhh, the CES last January, would KNOW that the future of TV has less to do with DVD players, and more to do with wireless projections from the PC and its equivalent, TO the TV.  Oh well.

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#28) On May 23, 2007 at 10:41 AM, apalus (< 20) wrote:

TMFBent,

Whether we agree on the future of DVDs or the meaning of financilal terms is irrevelant to what's going on with Pegasus and why you seem to have such an interest in a penny stock and spend so much time with thirty or so articles attacking the company and its executives. If the executives of this company are crooks as you suggest in your articles, how come they are still at large managing Pegasus which is a public company and regulated by securities laws, SEC and Nasdaq.

Please answer my question. Why are you avoiding talking about the 21M shares issued by Pegasus to satisfy $499K convertible debt that they say they did not know about before last October? This is 60% dilution and the most important unanswered question in Pegasus' Q1 Report. Why are you keeping silent about this and have not mentioned it in any of your articles on Pegaus?

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