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Innotrac Anonim Ortaklık Message Board

  • inocinside inocinside Nov 4, 2002 12:38 AM Flag

    Conference Call

    Hey guys - lets talk about the conference call..

    Where shall we start.. oh yeah, lets start with the rehash of having positive cash flow, yet having to dip into cash reserves and into the credit line. Seems like this is just another repeat of the same old story, except there are no cash reserves anymore and the credit line has been hit for 13 million dollars. What was the reason for the hit.. expansion into cincinatti/kentucky took part of it, as did IT expendatures. But hey, they are gonna convert 3 million of the expendature into long term debt.. At least they have found someone to finance their downfall long-term.

    Once again we got the same song and dance about IT expendatures being the cause for dismal performance. Seems that the start up costs for their new clients was more than anticipated. Now where have we heard this before? (Can you say the last five conference calls..) Kudos to the investment bankers who are finally catching on to this line and questioning WHEN this will change.

    Also, I heard the "reduction in overhead" phrase again, which was borne out by recent staff and management reductions at Innotrac. Just like last quarter, ther are "reductions in SG&A" that will help the bottom line. What is funny is that if you take the projected savings and divide it by the headcount that scott mentions, employees are costing well into the six figures. I can assure you that salaries and benefits (what little are left) do not cost that much. But once again, the same song and dance.

    Now, for what was new (i.e. read between the lines). Scott and David mentioned that IT costs will be leveling and that they are basing projections on only existing business. This tells me that they are not projecting any major new business. Why? Well, in order to hold down IT costs, they would have to not bring on any major clients since historically every major client had meant major IT expendatures and even INOC management knows they cant use that line in another conference call. So it appears that INOC is planning on concentrating on existing business. This is probably a good thing since rumors are abounding that there are many retail and catalog customers that are less than thrilled with service and would entertain the though of leaving were it not for the impending holiday season.

    I look to INOC to spend the next quarter working on existing clients, cutting IT costs, and reducing spending to minimal levels in hopes of showing a profit within 6 months. I do not look for any growth or new clients, instead they are trying to stop the downhill slide, or at least give that appearance.

    My suggestions for INOC.. Dorfman needs to review his executive and management team and cut some dead weight. Then a full review of existing accounts as well as P&L's on all clients, realizing that there is no longet the high margin telecom business to carry the non-profitable business. Run the company like when it was private..hands on. Then there will be a good future.