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National Presto Industries Inc. Message Board

  • pmlljl pmlljl Mar 7, 2005 10:13 PM Flag

    no_slapps-Salton

    no_slapps: Are you out there man? We haven't heard from you for a long time.

    Salton closed at $2.70 today. That is $.20 above its low for the last twelve months. The market capitilazition is about $30 million.

    Do you think NPK should still try to buy it?
    Is it a "buy" for investors generally?

    As I recall, I said it was probably worthless and would probably go bankrupt. The announcement may be drawing near. I am now predicting new lows in the near future for SFP.

    At this point there can be no question that NPK was a much superior company with much better management than Salton. I rest my case.

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    • pm, you asked:

      "Do you think NPK should still try to buy it?
      Is it a "buy" for investors generally?"

      Even with its problems, Salton notches more than a billion dollars a year in sales. But the company is currently spending $56 million a year to cover its interest expenses. Moreover, pre-tax margins stink. Therefore, if you believe Salton is headed for bankruptcy, then from your point of view, NPK should wait for the chapter 11 filing before attempting to acquire the company.

      From management' standpoint, it's not likely they would choose to buy Salton. The headaches of managing the company might overwhelm them. But it's hard to resist thinking about acquiring a company with a top line over $1 billion when it's available for $30 million. NPK management must have a few ideas about how to improve Salton's margins.

      If Salton restructures through chapter 11, the price tag will rise, however.

      As for individual investors buying Salton, well, that's a different story. For outright speculators, okay. But for typical NPK investors, forget it.

      pm, you wrote:

      "As I recall, I said it was probably worthless and would probably go bankrupt."

      If it's truly worthless, the company will file chapter 7 -- a liquidation plan. But that's not going to happen. With a billion a year in sales and a recognizable product, there's value in Salton and the surest confirmation of that value -- in this context -- is a chapter 11 bankruptcy filing.

      Take note that MCI -- post Ebbers, who was just found guilty on all counts -- is the object of a takeover battle. Why? Not for its long-distance business, but for its ownership of the Internet backbone via UUnet. The stock went to zero as a result of the bankruptcy. New stock was issued at $14 and the takeover will occur somewhere around $25 a share, I guess. Not bad for a post-bankruptcy company.

      See Chiquita Brands for a similar post-bankruptcy story. No takeover at Chiquita however. Just a rising stock price.

 
NPK
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