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TeleCommunication Systems Inc. Message Board

  • Keitern Keitern Nov 4, 2004 8:42 AM Flag

    Another view

    I like Tose' I like Tom Brandt. I think they are decent and intelligent. I don't know them personaly but I trust them.

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    • We have a unique advantage with this stock in that we have observed its movements day in and day out for years now. I say use that to your advantage.
      As to the value of this company I don't think anything is really different today than it was earlier this year when the price was over $8, in fact we are in a much stronger financial position and have another aquisition under our belts. Those investors paying $4.50 for all those shares are looking for $6 minimum. I think its all supply and demand. If and when this starts moving up everyone will think something has changed inside. Perceptions are manufactured by price advances and declines.

    • Well at least you have your expectations in line. Its long term. good luck. I have gotten deeper below 3 also.

      The underlying business is worth that if they just quit pooring money into R&D. So you get to wait and see if they get it done. Tose wants to own the space - unlikeley - but they screwed up on messaging as far as being a direct player so he has got the company and his ego on Location in which to build this company.

      He has nothing to lose really so he gets the investors pissed off - they are free to leave is most likely his thinking. He is a decent guy and we have all made some money here so what the hell.

    • Yknott, I respect that point of view. I guess that's what makes investing interesting and fun.
      I invested in about 20 strong (most cash flow generating) companies in late summer after the crash, companies like utsi ovti stgl cacs wrls athr komg evol ardi trdo sebl ssti issi esst. Several of them almost doubled (although I took profit before that happened) while TSYS languished and found a new 52 wk. low. Some say run like hell from TSYS but that's just the way I am put together. When I was buying all those stocks I listed above you should have heard the ridicule and it felt like it as I was averaging down. I lost 20% before gaining 20%. Now everyone is saying they are the ones to own. But I am here with TSYS and building a position because we are in an obvious (to me) trough. I have 1/10th what I origonaly had and I don't care if it goes lower. The lower it goes, the more compelling the value becomes.

    • Keith I think I have figured that whole scenario out. Companies that can command a stock price to a higher multiple of sales -- TCS at 1x sales and Sync at 3x -- have seriously higher gross margins. They may be managed the same but at some point the market decides that if or when they turn the corner to profits, the growth in profits will be substantially higher for each added dollar in revenue growth. Hence the higher price to sales ratio. This and the quality of sponsorship. If TCS wants a higher valuation they will have to expand margins or book profits or both.

      The run rate of $250 million is totally meaninglessw if they can't generate cash. They have got to this point giving up a little to essentially double revenues over the past 18 months. Now the hard part. Putting it all together. A weel managed profitable company with decent consistent margins is what people will pay for. TCS is not really even close on that score. Hence the $2.80 stock price.

      This is a long term speculation on location services that is risky. Thats the way Tose wants it. He could have a nice profitable e-911 business and look for opportunities incrementally. But he choses to shoot for the moon. There will always be this floor, e-911, so the real value of the company is will people pay for location services or will that whole end be commoditized like everything else to date in the wireless world. The jury is out but the market says at this point in time its not going to shake that way for TCS. Hope they are wrong.

    • hokie1, as an example of a company that is selling for a multiple of sales in this space (sort of) look at SYNC. Losing money like crazy, the company has a market cap of 160M and revenues of 50-60M or a P/S of about 3.

    • Yes, that is true. Tose' owns about 25% now. His selling was done in a completely above the board manner, he paid back his loan instead of seeking "forgiveness" like so many executives.

      Hokie1, Tose' has a stated goal of growing this business to 1/4 billion run rate in 2005. Brandt is projecting roughly 165M for the year as of today. I interpret that to mean that Tose' will seek organic growth and more aquisitions and attempt to have Q3 or Q4 of '05 hit roughly 60M in revenues. To do this he would need to increase TCS's best Q so far, Q2-'04 by roughly 50%. Now, if he can accomplish this without serious dillution and still maintain roughly breakeven results on a GAAP basis there would be no cash flow, correct? I see companies that have zero or negative cash flow that are selling at multiples of sales. I mean, get real here. You keep saying "focus on the bottom line" and "cash flow" and not on the top line. You write as if top line growth is no longer important. Well, I disagree. I believe that top line growth is more important with the caveat that as an end game the company becomes cash flow positive.
      hokie1, how do you percieve the risk here? At one point, I agree it was looking pretty risky. TCS debt/equity was creeping up and cash flow was looking pretty poor. Today, the guidance is for .00-.11 GAAP and decent ebitda. What are the chances in your view that TCS chokes on this and ends up cutting and running on LBS?

    • he owned "super shares".

      The CEO, to my knowledge, never owned a majority of the stock. Instead, the stock he owned gave him majority voting control.

    • Cub fans have ben waiting for"next year" for 95 years now.

    • How true, maybe the latest results and dive in stock price will be the cold hard splash in the face that gets these guys to understand. There are ways to cut control costs in a $150 m+ business. As they are working their budgets for next year, I hope they at a minimum are planning salary freezes, if not across the board cuts.

      I guess we deserve to get our faces kicked in if we keep believing that "next year" things will be righted and these guys don't deliver.

    • If they would just break even would see 7 to 10 easy with a modest profit 15

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TSYS
2.55+0.01(+0.39%)Apr 17 4:00 PMEDT

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