better than expected results and guidance largely caused by the Durban Amendment - management made clear these windfall profits won't last long as clients already ask for re-negotiation of contracts.
Banking clients business still eroding quite significantly causing further margin compression.
FY12 Revenue and adjusted EBITDA won't be up materially from FY11.
Company will miss out on its FY13 growth and EBITDA targets laid out in its strategic restructuring plan back in 2011.
Balance sheet still a bloody mess with $120 mln redeemable convertible preferred stock outstanding - management admits that banking clients refuse to sign agreements because of the companys' capital structure.
Goodwill assets of $182 mln are screaming for an impairment charge which would result in negative shareholders equity.
When reading the pr I thought the company might finally have turned the corner. But it is just an temporary windfall profit caused by outside legislation.
In fact the company is still the same mess it has been for many years and will continue to do so as management admitted on the call that restructuring targets will be missed.
Management stated that they are actively adressing the convertible debt issue but this could very well mean more troubles for the already beaten down shareholders. It's pretty clear that the bondholders will ask for a substantial share in the company to accept a debt for equity swap. So current shareholders will be diluted quite heavily or even wiped out completely if the company doesn't manage to restructure the debt and needs to go through CH11 proceedings.
Had high hopes going into this call but what I heard in fact was devastating.
I have been posting similar sentiment since ORCC ill-fated acquisition of Princeton eCom. They were doomed from that point forward as they were not large enough and did not have the capacity to do a reasonably priced acquisition let alone one where they paid 3x what any other rationale buyer would have paid. Current management is not responsible as that was done under the watch of the three clowns that used to run the show.
The real question now is how do the convertible preferred shareholders move forward. The company has no value in liquidation, but it will die a slow death until the situation is resolved. The solution is sticky enough and difficult enough to try and get off the platform that customers will not make a long-term decision to stay with ORCC unless they know that they will be solvent.
Moving all programming to India worries me also. This has not worked for many smaller companies because of the communication overhead and problems. Indian programmers tend to be pretty sloppy sometimes.
based on what i have seen in the sec filings....this new leadership just wants to get the stock price up since that is where they truly benefit. i cant see them wanting longevity at this company. combine that with the past experience of this leadership team and the pattern is an ultimate sale of this company. the stock is cheap right now and seems to be getting cheaper...for now.