Spok Holdings, Inc. (NASDAQ:SPOK)

The company operates communications software for healthcare facilities. A service that is critical and cannot be compromised. Spok's customers are the largest hospitals in the US. It has gone through a transformational turnaround that resulted in a significant headcount reduction and cash costs. Spok is now focused on free cash flow generation and a massive $1.25 annual dividend.

I don't like thumbing anything down. I have few underperform calls. I find that even when I'm right, it takes years to resolve a failing industry. In this case, however, I feel the underperform is the only way to go. Pagers have already left the public consciousness. If it weren't for technophobic doctors who cling to old customs and practices, this business would have collapsed ten years ago.

Yet, those same doctors and administrators refuse to update to digital storage of patient records. Those same doctors cling to outdated and dangerous dietary recommendations. So, are they going to give up their pagers next year? No.

But as you can see from the declining revenues at USA Mobility, they lose more and more market share every year. Soon, they won't have anything left.

Their plan to 'innovate' sounds like the strategy of hope. Their note about their inability to track installation of software well enough to accurately book sales in past years says they are losing control of their sales model and cannot make accurate decisions.

Heck, their revenue numbers might be fundamentally incorrect, and they admitted it.

I cannot imagine a way out for them at this point, short of completely shifting their business model. If they could have, wouldn't they have done it by now? The writing has been on the wall for a while.