There were definitely short sellers of this stock that didn't own shares. If you believed like I did that this stock was heading to zero it was an easy short without any interest in ownoing this stock which would have wiped out my profit. Naked short selling is a stupid idea on non volatile non cyclical companies.
Your numbers are a complete guess and what your not factoring in is the horrible customer service, and they sell products and services that hundreds of companies sell now and for a much lower cost and with way better service. Dex had something to sell in 2002. Now with the over head they have and bad management on the customer service it's just a matter of time before it completely fails.
From YP Canada last Q2 earnings paper declined 21.3% and digital grew by 7.2%. DXM's paper advertising declined between 20% and 22% up to 2015 (but in one quarter fell by only 18.5% if I am correct) and digital grew around 10% in
Here are the assumptions for the calculations in the thread above:
Interest payments 10% p/a start at $60M quarter declining as debt reduces.
Mandatory amortization $30M per quarter
No sub par buy backs
Cash sweeps 60% of remaining cash after interest and mandatory amortization Savings in 2016 with compared to 2015 of $50M due the difference between total 2015 savings and run rate savings
digital / print mix
2015 2016 = 30/70
I would loan money at DXM 3% (or less) if I was going to loan money to GM at 1%. I would buy DXM debt at 7% if all the debt was re-issued at 7%. I would loan money to DXM at 5% if I was going to loan money for Dell to buy EMC at 5%.
It does not have any losses. It has profits every quarter. Depreciation is a non-cash expense. Profits (cash flow) are higher at DXM than GM and TSLA combined, yet GM gets to borrow at 0.8% interest. That does not seem fair.
No way! Impossible! As It's Never made a penny while big loss quarter by quarter.
The Only way: Filing Bankruptcy to delete its vast debts, as It's been Done Twice in the past years! (it filed Bankruptcy Twice ALREADY!).
The 3rd Bankruptcy is imminent, any time and all bagholders will lose all, like it's done before.
Having worked in the business for several years, your numbers are a little off. Should be 30% decline in paper and going down an additional 3% - 5% YOY. Digital growth is 7% at best. Would like to see what your numbers look like adjusted.
we should pop to 30-35 cents, but even if the company survives, and thats a huge if, i seriously doubt this stock will ever go past 1 dollar
Here are some scenarios for what DXM will look like in four years time. I tweaked the calculator and I think I have the most realistic extrapolation yet.
Keep in mind that today DXM has a net debt / EBITDA ratio = 3.58
1) Digital +15% Paper -20% FY year 2019 net debt / EBITDA = 4.6
In this scenario DXM continues to accumulate cash every year and has nor problem meeting interest payments and mandatory amortizations but debt relative to EBIDTA grows from current levels. Not desirable for share holders that would be worse off than today.
2) Digital +15% Paper -15% FY 2019 net debt / EBITDA = 2.4
Better than today ! (Remember that paper makes up 70% of sales).
Debt is smaller in proportion to earnings !
3) Digital +20% Paper -15% FY 2019 net debt / EBITDA = 1.58
Much better than today !
4) Digital +25% Paper -15% FY 2019 net debt / EBITDA = 1.00
This a think would be the target ! With these metrics DXM can really take off !
There just has to be uncertainty over future growth rates given that the products are new and untested. For this reason the management is probably trying to negotiate some better terms. What happens in the case of another bad recession ? What if the numbers don't even make scenario n*1.
Well that's why I suspect Joe is asking for a reduction in the interest rate. It would be a zero sum game for the debt holders in any case as all excess cash goes back to them in the form of cash sweeps and buy backs of some form.
DYODD or send me your email address I will send you the excel with the calculations
this franklin thing is very creepy. just to say the link on market pulse, they show not only they have no shares of DXM, but also they have only one stock left: FXCM Inc., it is a company near bankruptcy with almost 0 value.
I suspect someone is really doing a hoax here. the real franklin group who is able to control the market to avoid short squeeze when they shorted millions of shares shall be far more resourceful than this one. this company which "sold all DXM shares" should be just their shell entity at the best.
So DXM has the similar net debt / ebidta ratio (3.58) to DEXO in 2011 (3.68) (RHD emerged from BK as DEXO in 2010). I assume DEXO debt level was considered sustainable at the time as it had recently emerged from bankruptcy. (Instead RHD Donnelley hit the wall in 2009 with debt / ebidta ratio close to 7.3 double that of DEXO or DXM).
DXM share price is indicating BK but looking at things from the long side Joe may have chosen not to side with the equity holders during this period as this could prejudice negotiations with the senior secured debt holders.
The main part of the debt restructuring could be about condensing debt silos into one entity, which in turn may even reduce credit risk, and not about a debt for equity swap, for which there is much speculation, or in fact a BK. If after condensing debt into one entity management was able to negotiate a 1% discount on interest that would mean $25M less interest payments per year (like having $250M less debt) a 2% discount on interest payments would mean $50M less interest payments (like having $500M less debt). Back in Q4 2011 DEXO was paying 7.7% interest against 10% that DXM is paying today.
According to my extrapolations with perpetual +15% digital growth and -20% paper declines starting from Q1 2016 DXM will continue to accumulate cash at least through middle of 2017 and that is not considering any discount on interest payments mentioned above and other potential benefits such reduced interest due to sub par by backs.
Choosing to restructure the debt stack the during a profound company re organization and in the midst of a transition to new and untested products has to be
We just saw a deceiving play by Franklin. They shorted their own shares. So there comes next questions: whom did they sell that 2 million shares to? If we trace the transaction, we saw a single 2 million shares transaction a few days back which didn't cause any significant stock price changes. I suspect they just sold the share to another company owned by Franklin so small investors will keep under panic mode while they reduce their short positions.
One thing to note, dex media home website rise in global ranking for web traffic by over 1000 just for today, compared to 3 months ago. So let's see.
Sentiment: Strong Buy
would you lend DEX money at 7%? Lets say you take a second mortgage out on your house, and lend your entire life savings to Dex. Would you do it for 7%? Or are there other more credit worthy companies in flat to growth indutries taht would offer that and more. The trouble with any lender being involved is the company is losing customers and revenue so quickly, it is hard to determine when the company simply can't even pay the interst on the loans. There is nothing DEX could do with a brand new injection of capital that would turn the massive revenue slide around. Every day looks darker than the day before, every hour is darker than the hour before.
The current rate DEX will be paying for any new or refinanced debt after bankruptcy is 20-24%, due to the long term risk.
Seanoise, you are 100% correct on this point. Its obvious to anyone that understands markets.
I see a filing by Franklin which says they own 0 shares of Dex Media. Is it true? WHy do they file when they have 0 shares? The 2 million shorted shares were used for hedging by themselves, since they fully controlled the market, so no short squeeze. if you see the trading recently, there was a spike to 40 cents, that might be their short cover (buying back the shorts), then you see a 2 million shares sold, that's their sale. They cleared their position, but who bought it? there are still 3 million shares shorted, if franklin is out, then short squeeze may happen since no big guys to control the market. Not sure what will Paulson do, he is the billionaire who is stilling holding big shares.
Sentiment: Strong Buy
you have it backwards. they closed their short position because they sold their shares. as i have been saying for years, they had their positions hedged with a short position. that's why the shkrt squeeze everybody always waited for never came to fruition.
Wonder in Franklin HAD to sell out so that they could cover their short position ? Nearly 2M shares were bought back in second half of September (Franklin share sale supposedly was 2.7M).
An article way back stated that a purchase of one million shares could potentially send stock up by $10.