I have been a "value" investor and a scavenger (at times) for 25 years and have bought many companies at their "liquidation" value if there was minimal cash burn and some value to the business (i.e. thus buying the business's value for "free"). To say that a company is "free" is to imply that the balance sheet value one is working from has been carefully calculated with detailed knowledge of leasehold obligations, employment contracts and other liabilities that might appear if either the company is actually liquidated or if it is sold. Then, if that exceeds or equals the current market value of all stock outstanding (and to be outstanding with increases in share prices as options might kick in) then one needs to value the "business." Also one needs to look ahead and not in the rear view mirror in doing these valuations. The resignation of the CEO certainly creates the feeling that the coming financial report and the current pipeline numbers will not be pretty. As of the last Q reported, and this assumes the A/R number is good...they had $23.2mm in Cash + A/R (only assets worth looking at here) and they had about $13.1mm in total liabilities ON THE BALANCE SHEET...for a "net" value (before any losses through 9/30 and non-balance sheet liabilities) of $10.1mm. If it were not for the continuing shrinkage in A/R, they would have burned $2.8mm in cash in the first 6 months of 2010. Thus, if one feels they can at least maintain their current (first half performance) going forward, they are burning an average of $1.4mm/Q...which gives them 7 Qs to infinity. The market seems to be making the same calcs as if one assumes there was a $1.4mm burn in Q3, then their "net" is $8.7 on approx 5mm shares which equates very closely to the share price and says the business is valued at ZERO. Thus you buy a business that is burning $5.6mm/year in cash at its first 6 months performance rate for FREE. But who wants to pay to burn cash?? Very sophist to say this is FREE. Sometimes a "net" liquidation value in excess of the share price is there for a valid reason, albeit there are occasional "inefficiencies" with small caps. They have lease commitments for over $7mm and while they do have a tax asset of some size (and of value if THEY were profitable) it will not be worth much to a buyer since on a change of control the amount that can be used is minimal each year (riskless rate times purchase price value!) Fool's Gold!!
It seems to me they are bidding out work at a loss in hopes that things will change. The last CEO basically confirmed this when he mentioned he would be rejecting projects from the staff/managers because the anticipated margins weren't good enough. I think the culture at ANLY is not disciplined and lacks confidence in the value they add. I've worked in that type of setting before. Some people just don't have faith in the value proposition, so they don't stand up to customers. They wind up giving sweetheart deals to appease the customer in hopes that something will change, which is the whimps' way out. These people basically train the customers into thinking the service is cheap and not worth paying for. This is NOT the way to run a business.
I suspect this is happening at ANLY. They need to establish minimum margin requirements that will provide the company a profit, and no project should go beneath that threshold. Sell the value proposition to customers and make a profit, and if there is not enough conviction to do it, sell the business to somebody who has that conviction. Losing money quarter after quarter is not an option.