Where can LF find a toy, learning or any type of company to buy at the value of their own company?
The answer is they can"t. I'am not always big on buybacks, but if they have the confidence in their future that they say a buyback at anyprice below 9.5 is an absolute steal!!!!!!!!! In fact I believe they have both a moral and even fiduciary responsibility to do this before even considering buying another Company. As a takeover target i also makes them worth more. The thing that continues to amaze me is HAS MAT and Lego could really benefit from owning these guys. Lego is now the largest of them all and just a few years ago was considered a one product fad and the bank refused to loan them money while their no public you can still get info on them and the history is somewhat similar to LF.
You've got a different perspective on businesses and stocks than I do.
IMO a business exists to make profit which comes from everything from marketshare, cost reductions, quality product..etc. Buying stock is buying into that vision and if all goes well the stock price will go up as a mirror of the companies efforts. If the business is run poorly, loses market share, costs run up ...etc then the price will go down as a mirror of those poor results
You seem to think a business exists to make the stock price go up. Thats short term and counterproductive to any business imo
Yes you are right a business exists to make profit. A public company ALSO exists to make the stock price up because that's how it's investors realize those profits (well that and Dividends). I do agree that they can't worry about short term fluxuations in the stock price, but it seems we disagree on how much cash they need to run their business and what to do with the cash they have.
when management says they are looking into acquisitions as a use of the cash position they have accumulated, that doesn't mean competitors necessarily. It could mean companies that produce components of the hardware or software used in the leappad. It could also be a company that you didn't even know existed that could help them branch out. I understand why frustrated LF investors are hungry for a buyback, the pps would no doubt spike in the short term. But lets face it guys, this isn't a get rich quick stock. Its more of a "relax and enjoy the ride stock". To any investor that is annoyed at having lost the gains they've made from this stock, I sugges allocating a certain amount of your portfolio to holding shares, and then trading in and out of smaller amounts on dips and spikes.
The management of this company does not cater to retail investors, those are just the facts. So we all must decide whether we believe in the management or not. I personally do, GLTAL.
I know I've posted this many times and not sure why people don't acknowledge this, but there is zero reason for Leapfrog to get into making hardware. They don't have any special hardware technology. All the components they use are standard things like touchscreens, memory, motherboards, and processors which are very competitive, mostly low margin businesses made by huge companies.
Buying another company can be extremely risky. They'll need to pay a nice premium for an acquisition and if the integration doesn't go smoothly it can end up being a mess. They'd basically be making a bet that whatever product they are going to buy can become a big success (if it was already a big success either the other company wouldn't be selling OR they'd be paying such a premium for the company that it would have to be even MORE successful than it already is). Leapfrog is a $550M market cap company with $200M in cash. If they took almost half their market cap to buy another company the risks would be HUGE. If they want to pay $10 million or something to buy some idea which they think can be a big hit, that's great.
Leapfrog should concentrate on what they know how to do, which is make quality, educational toys. They don't need to buy another company to do that and they don't need $200M in cash to do that.
If Hasbro or Mattel bought Leapfrog it would be a lot different. There you would be talking about a much bigger company buying a much smaller one. They would be able to tie in their existing products with the Leapfrog products and leverage their big presence in retail shops to get more attention to Leapfrog products. Not to mention being able to utilize Leapfrog's Net Operating Losses which is worth a few bucks a share.