The Company is a provider of digital technology services that enable the electronic delivery of advertisements from advertising agencies to traditional broadcasters and other media outlets.
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This is a great entry point for a quality company growing at a 20-40% clip with almost no competition.The stock has sold off from its high in the forties. Why did it sell off?1. The company announced that it would miss on the analyst estimates for Q3 and end of year revenues and earnings. Note that revenues are still expected to climb 20% and EBITDA at 40% on the year.2. The CEO and found sold off about 1/3 of his stake in the company.3. The company sold around $100 million worth of stock to pay off its long term debt and to build up a cash hoard.4. This is pure speculation, but I wonder if a lot of future growth was perhaps anticipated from its partnership with Google TV. And Google TV seems to have struck out last month when they made the rounds around the Hollywood studios and content creators seemed to universally dismiss its overtures to try to push out the middle-men (content deliverers) in favor of Google with higher revenues in the form of targeted advertising. (Don't be evil. Eat cookies!!) But DGIT is still sitting pretty. They are still growing insanely fast. They still have none or almost no competition. They still have an old media radio and tv business that will continue to grow into the future. Also as the only game in town they should be able to extract greater profits from their existing market share.
Regarding the "investigation," it is really hard to get away from the idea that there was a 10b5 violation here.
Scott Ginsburg, Chairman and CEO, last sold shares on August 2, 2010. The transaction was 42,500 shares for a total of $1.6 million at $38.
On August 30, DGIT announced that it would miss forecasts for Q3 and Q4 and the stock price closed that day around $15. Moreover, there were no material factors that the company could point to on August 30 that would not also have been within view on August 2nd.
The poor guy may simply have been in over his head with debt. One imagines that Mr. Ginsburg's Boardwalk Auto Group which sells luxury cars is giant money vortex these days.