What the hell makes you think they have a lot of cash? They don't have anything near $700 million in the bank, and the Street knows it. I'm afraid that they have burned more that $350 million this quarter. My estimate of $450 million is generous. I also think that they are burning more than $50 million a month on a stock buy back from which they have now suffered huge losses -- many share were purchased in the high 3s and low 4s. So it's quite possible that the company could lose in excess of $300 million this quarter alone from the stock repurchase!
I think that PG would be perfectly content to drive this company down to 10-20 cents a share, in order to have management make an offer to take the company private. By then, PG will have parked ASCL cash in several of his friends' companies under the guise of acquisitions, and will be able to buy the company for about $30 million. Then his buddies will buy back in with him and they can pocket whatever cash was parked.
How else can you explain the rapid decline in share price, with no explanation from any ASCL executive. Simple: If they stay quiet, no one will notice!
is the market itself.EMC down almost 90%.Oracle down 60%,Sun down 70%,should I go on or is your peabrain so small you cannot understand companies are not spending money on new or even old technology.I posted before but obviously you cannot read,that my oldest some has a high position in a major company in the USA and around the world and he usually spends between 40-60 million a year in upgrades on products.They are not spending only on minimal products until their business turns and it has not yet.Those are the clear facts you do not understand and continue to question,its called technology bubble.Get a life and go play golf like I did today and get away from the computer.Adamo
They haven't been buying back anywhere near the amount of stock it would take to burn $50M a month or $300M this quarter. The average volume is around 1M/shares/day, and there were two peaks of 6-7M for a day in April and a day in May. Assuming ASCL bought all of the shares on the volume days, they purchased 6M shares at $4 in April and 7M shares at $3 in May. That's $24M and $21M, which is a far cry from the $300M IG claims. And he's accusing PF of outright lying at the shareholders meeting because they told us they had more than $700M when you count the IBM payment.
The idea of a management buyout doesn't make any sense, especially when you look at it from the standpoint that IG claims. If PG and Company are just here to rape the shareholders, why take it private? His entire argument is that they can't make money because no one wants their product, yet he claims there is an evil master plan to drive the stock price down to where management can take it back over and then pocket the cash from the true value of the company via the acquisitions.
What does make sense is that management will watch the stock in free fall until the end of the summer and then start buying back at an incredibly cheap price. They need to get rid of the float in order to package the company up to be sold, and the way the market is going they'll be able to do it for cheap.
Watch the volume. When ASCL decides that the price is right, you'll be able to ride the wave from the retirement of the stock. If we really do see about $2/share, they could put a serious dent in the float with their cash on hand. What kind of price would you see with a stock that averages 1M shares/day in volume and a total float of 20M shares?
If they wanted to reduce the number of shares, all they would have to do is 1:10 reverse stock spilt. But the fact still remains that nobody, and I mean absolutely nobody, is interested in buying this company, in large part because it does not, and never will, have a viable product. Plus, even if a new purchasing company could drop the existing management team, it would cost a fortune to do so.
Who in their right mind buy a failing company, with incompetent managers, and no product line. Unless of course it would be done for "stock" that is equally worthless as a means for the acquiring company to get its hands on the remaining cash hoard.
BOTTOM LINE: ASCL's days are number at fewer than 180.