Bit of realistic talk cuts deep. What CFO saw was this company growing huge revenue in hot emerging sector but had terrible cash flow and high DSO.
1. top priority is generating positive cash flow
2. said "meaningful positive cash flow" was in the card for FY 2013
3. will forego some attractive deals in Europe with EBITDA because they weren't
generating positive cash flow. Because of that EBITDA will be down compared to 2012
4. cash need to pay for acquition and operation is sufficient this year
Anyone who's been holding prior to today, knows Velti had issues and high short interest is an indication of structural problem. Sure, they generated huge revenue but at what cost? High DSO and uncollectable account. What's the point of getting a deal if the chance of getting paid is suspect. If it was previous CFO, you would have heard none of it until earnings announcement like last time where it will tank again and in the process lose the trust among investors and analyst community. With new CFO, when he had an opportunity to talk about status of its business as it related to financing, gave honest assessment.
The impression I got from the CFO was in short amount of time understood the primary problem of the company's finances and came through as a honest credible person to build solid financial foundation for the long haul. In the long run he will build strong trust with shareholder and WS/analyst community.
Thanks, Jeff, but obviously Wall Street didn't like him or his news all that much as it plummeted the value of the company. The impression I got is he's a babbling idiot who ran out of things to say so he started talking generally about things that should only be discussed in official releases in conjuction with concrete information.
Damage was done when he mentioned "declining EBITDA" compared to last year. But deals although positive EBITDA was not cash flow positive, thus causing company cash contraint or allowing company to put together other future deals.
The choice is between higher EBITDA/revenue, less cash low and Greek operation divestiture mess vs better quality rev, although less EBITDA and higher cash flow. I do think there is silver lining here with respect to his thinking and the crazy sell off today caused by algos an opportunity to buy or add cheap.