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Speed Commerce, Inc. Message Board

  • g_bowen1 g_bowen1 Jan 26, 2006 4:05 AM Flag

    Crystal Stupidity

    It is kind of a joke considering where the cries are coming from. So what has happened in the last couple of days?

    Analysts� have now upped the numbers to in-line with what I posted last week (kind of funny). Piper raised a price target.

    Somebody posted a write-up on the new bankruptcy law in CFO mag about trade vendors being more able to get 100 cents on the dollar on items shipped within 45 days prior to Ch. 11. (Least you think that there is no inventory in that category, check out how samgoody.com has inventory on Navr exclusive music releases with release dates of 1/10/06).

    Someone else posted an excellent write-up on Trans World Entertainment. For those that watch, a nice 50k share block purchase went off on TWMC this morning.

    Hayes, oh my oh my! How much cash after taxes should NAVR have coming in this year? How much did they over borrow? With the guidance EP gave 1/2 way through the quarter in Nov. how much EBITDA and Cash is left to come in Q3 and Q4?

    I will attempt to answer these questions as best I can.

    a. Of the 40 million yearly EBITDA forecast(mid-point of range 11/20)) only 14.5 million was earned in Q1 and Q2, leaving 25 million in EBITDA and ~12 million in cash earnings left to come in Q3 and Q4.

    b. Navr borrowed 140 million. They used ~99 million in cash for the FUN acquisition, paid back 21.2 million on the loan as of 9/30, they paid Encore guy 3.5 million (I think that was the correct leftover cash amount for this year), and it cost them around ~3 million to get the original loan. So that gives then around 13.3 million "leftover" from the loan.

    c. At 40 million EBITDA forecasted for the year, that would "generate" ~20 million in cash earnings from operations for the year.

    So for the year, NAVR should have ~33.3 million to play with in order to grow the business and make additional debt payments. (Actual cash stood at 35 million as of 9/30). The cash is available for: investing more in content licenses than the rate at which they amortize previous license investments, investing in increased inventory related to growth rate, paying down debt beyond the 9/30 levels, and to cover the cash portion of the ML bad debt.

    Since the inventory levels historically come down between 9/30 and the end of the fiscal year, I believe they most likely have paid down ~15 million more in debt in Q3. This still leaves a very good amount of money to invest in growth for next year, which is what they appear to be doing.

    Additionally, IMO it is likely that there was a payment from M&B to NAVR of at least $750k in Q3 (I get that from reading between the lines on changes made in GE agreement and the 10-Q discussion of a related party loan). This number could be 2.5 million dollars higher if M&B secured additional outside funding in Q3.

    These numbers do not point to the sky falling IMO. There is the potential for a very bright future when you look at the investments made this year and the resulting number of products that have initial shipments slated in Q1 and Q2 2007 (see funimation news), a potential reduced debt load, no more 3.5 million payments to Encore, the ML bankruptcy out of the way, potential monetization of the M&B investment.

    A key number remains the Q3 EBITDA number to be reported 2/7. If that number is strong IMO there will not be 11 million shares

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    • He BOUGHT puts, he didn't sell them. I don't believe he is hedged , at least not with puts.

    • I've seen to roll forwards many times too. I just think the whole picture is not public. If he's really that short without protection at this stage (read that bad at risk management), then he will have to fire whatever is left of himself after they crash and burn in this one.

    • You're just absolutely incorrect about Rocker's position. Anyone who has been here long enough has followed the same puts rolled from month to month. The last 13F dated 11/30/2005 shows he was long 15,191 puts. We've watched them roll many times and there is no way he closed them out and then sold puts.

    • his behavior is beyond stupid if he is hedged. and if he is not well I really don't know what the heck to think??

    • If he sells puts and lets the stock price stagnate, he profits by the volatility premium he sells. It offsets the stale money cost. But it's not great money management and just a stall in my book. I think it comes down to the fact that he can't cover without taking delivery of put shares. If he buys shares the price rise will eat a large chunk of his gains. There's no way he will lose on this as a whole strategy over the last year or more, but he doesn't want to give any back. If he were actually short shares and short by holding puts his exposure here would be not just risky but damn stupid. He simply has to be hedged, and the options are the only way to do that - buy calls or sell puts.

      You are right of course in that if he has sold enough puts to cover his short, then he gains by letting the sp run to any level short of his put strike. In that case he covers after the fact at the net of the strike price - put price received, and he gets a discount ftom the share price in effect when he sold the puts, because much of the volatility premium will have evaporated. That's why each expiration I'm surprised that he doesn't do that. His behavior here is beyond stupid imo.

    • I agree this is not hedged. last month lone it cost 3 million for the extra 5ook shares dumped on the share price to hold it down. Nobody hedged would dump 3 milion on a stock at this level and pe if they were hedged. I agree rocker is running out of options here. Seems NAVR is screwing up just enough to keep rocker in and not enough to get us out. makes for a real tight coil in the spring. something is going to give soon

    • hedged!! hedged with what? there are not nearly enough outstanding puts to equal 11.5 million shares short. rocker has an enormous problem in covering and better pray real hard that this quarter sucked for navr because if it didnt and they did pay down debt and the cfo is good, he's in trouble because this stock will rise rapidly. if long money realizes this, they will run this stock to 15 before he can do a damn thing.

    • Bowen for CEO, CFO, & head of PR at NAVR!

      Your analyis makes a lot of sense and always a pleasure to read intelligent meaningful posts. I've been patiently holding NAVR for some time and believe it is poised for a run-up although the short interest mystifies me. I know the shorts need volume to cover but anyone not reducing there short position at this time seems to be taking unnecessary risk.

      • 2 Replies to onerocketman007
      • The only way the azzhole can cover without a huge spike is to sell puts and allow the stock to be put to him, using that stock to cover. That's why he sells jillions of puts. I don't believe he is at any risk because of the put hedge (selling puts is a long play, offsetting the short position). Eventually he will stop rolling those puts forward and just let them be exercised against him. Then he will be gone. He has made an obscene fortune here but the cow is dry and it's time to get the hell out. It's a matter of time to do that while keeping all the booty he stole from the investors by artificially holding the price down. As long as he stays he is losing opportunities elsewhere and paying interest in his net margin balance.

      • G_bowen1

        I want to thank you for your excellent posts. I am an optimist but got a little weak in the knees the last few days. Thanks. 25,000 long and strong.

        DDSDOLLAR

    • I agree with you
      and thats the way I had it figured
      thankyou

      stop selling mookie we are going up
      the senerio is navr kicked butt again
      end of story

 
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