SuperMedia and the Kryptonite
October 26, 2011
– Comments (2) |
RELATED TICKERS: SPMD
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.
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