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CLRS Message Board

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  • tex7779 tex7779 Jul 28, 2002 3:20 PM Flag

    Disappointment

    After listening to a replay of the CC, I have a few comments:

    1. During the Q1-02 CC in April, SJ gave guidance for Q2 performance. This was at a time when the proxy fight was really getting hot. During Q2-02 they had channel partners sell the software so that CLRS received $ 1 million from these sales. How much of these sales went to the channel partners. I don't know, but I would guess that those channel partners would not mind getting the $ 1 million that CLRS got.

    2. Fundamentally I agree with perfectfilly in that it is time to close the shop. Judging from the time elapsed and the CC comments, I am of the opinion that they are still in discussions with a number of potential suitors. If liquidation is the only viable option, Kanders and co. would have pushed for this already. Liquidation alone will get us only something less than cash value, and the longer they dilly dally with that concept the less there will be to pay out to the shareholders including Kanders and Ehrlich, who spent about $ 186 k alone to buy additional shares during the time of the shareholders meeting at an average cost of $ 5.65.

    3. My guess, and that is strictly a guess is the following:

    CLRS will be sold to another software company, one that has or is expected to have positive income, thus having an income tax liability and which could benefit from the huge NOL that CLRS has accumulated, now being more than $ 240 million.

    The main part is the cash position. It ought to be abundantly clear to the most casual observer, that in today's market environment " CASH IS KING ". Even a strong company like GE is getting beat up in the market because of fears regarding their short term, 1 to 2 year debt structure. This does not even begin to address the many energy companies like DYN, CPN, AES, and MIR, whose balance sheets have a lot of people gravely concerned.

    Any buyout will, IMHO, be in the form of a stock purchase whereby we will be offered stock in the aquiring company. Who is the most likely buyout ? It would appear based on the profit based criteria, that would to me most likely be Microsoft, Peoplesoft, or JD Edwards. All three have quarterly revenues in the multiple hundred million dollar level or more ( like MSFT ). Something tells me, and that is only a hunch that it will be JDEC. They are a channel partner after all and could quite easily to a buyout with perhaps a 10 % dilution of their common. They 121.3 million shares outstanding with 300 million shares being authorized. PeopleSoft is in a better shape. If PSFT were to issue let's say 10 million shares at 15 or 16, that would be only about 3 % dilution on the 310 million shares outstanding and 700 million shares authorized.

    Note, that I have now give no value to the software itself, as that would be an intangible or goodwill asset. Any payment for such intangibles can be quite painful, as we found out the hard way as CLRS has been busy writing off many of the software purchases from the heydays.

    In closing, the longer that SJ and Kanders wait, the less cash we will have on hand, and the more this stock will drift downward. Over the last few weeks there has been very anemic volume by what appears to be primarily daytraders who go in and out for 100 or 200 shares at a time, or there are still some ex-CLRS employees who need lunch money or greens fees or whatever that compells them to sell this at 100 shares at a time.

    My current estimate is a takeout of between $ 7 to 9 per share in stock of the aquiring company. The most probable time frame will be before the end of the current quarter.

    As alway, JMHO.

    Tex

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    • >> including Kanders and Ehrlich, who spent
      >> about $ 186 k alone to buy additional
      >> shares during the time of the shareholders
      >> meeting at an average cost of $ 5.65.

      How long at BOD compensation does it take to
      get that back ?


      >> Microsoft, Peoplesoft, or JD Edwards
      Thats an old shill chestnut.
      Even Great Pains knows this software isn't
      worth anything. They dumped and ran.

      >> My current estimate is a takeout of between
      >> $7 to 9 per share in stock

      What happened to the double digits. why would anybody pay more than cash for this cow.
      Give one example where that senario ever occured.

      Just say I'm sorry to Frog boy for doubting his short position. It made money, your attack on him would have lost money. Oh, thats right my saying short at 5, you going to admit you
      never get it right, or crawl under a rock like
      edado.

      You and uptick going to tell us how much stock you are buying and when ? After all these are your rules.

      7-9 what a joke. 5 if your lucky, and the market agrees.

      • 1 Reply to cynicalfool2
      • cynical said, "7-9 what a joke. 5 if your lucky, and the market agrees".

        Though I do have some level of respect for anyone that would be "cynical" in this market, I have to disagree with you on that one... in my opinion, the company could issue a $6 cash dividend, then dump the rest for whatever they could get (at that point, who cares... I have an average buy-in of $4.59. Though I do feel for those with much higher averages, I think they should be happy to get that much of their money back on a company that has no viable future as a going concern). It makes sense that they would be able to get a couple bucks for the value of the accounting write-downs on their books alone, but as I said, it really wouldn't matter at that point (after the initial dividend). Of course, this is only one liquidation scenario, and as others have pointed out, we could be looking at an all stock deal, but I think the chances of that are unlikely, considering so few companies are taking a chance on M&A's in this market. Again, all just my opinion. Happy Investing!

    • I could not agree more.

    • Tex: Thanks for your imput.

 

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