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Ascential Software Corp. (ASCL) Message Board

  • gwade_pfs gwade_pfs Feb 2, 2003 5:53 PM Flag

    Mr. "Guru",

    All of the meaningless pumpers-bashing-bashers posts aside, may I ask you a question?

    What, in a nutshell, is the basis for your short-term pessimism re. the stock price of Ascential?

    I have no position in ASCL right now. I trade it from time to time. It seems like things are going well right now. But I'm open to the other side. So, "what's wrong" with this stock?

    And, are you short ASCL?

    Thanks in advance, -G.W.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Bottom line?

      The company had $1.2 billion in cash a year ago. Now it has $500 million. The company continues to lose money, even if it claims to have increased revenue on a "pro forma" basis. The management of the company is exceedingly self-serving; and the BoD is compensating ASCL executives at near criminal levels in light of their performance.

      Need anymore reasons? I have dozens...

      • 3 Replies to InvestmentGuru2001
      • Either way ... $500M or $600M is a hell of a lot of money .... how many other companies their size have $500M+ in cash and no debt?? at the current burn rate the money lasts how many years??

        "At December 31, 2002, the company had $504.8 million in cash, cash equivalents and short-term investments. Major items affecting cash in the quarter were repurchases of the company's stock, an income tax refund, merger and realignment activities, and settlements relating to the IBM transaction. Not reflected in the year-end balance was approximately $109.3 million received from IBM in January 2003, representing payment of the original $100.0 million holdback in connection with the sale of the Informix database assets, plus accrued interest."

      • Gwade,

        You have to forgive our poor IG... He keeps changing his position so much, he doesn't know his own arguments any more. And worse, he doesn't even know how to read a financial report...

        IBM paid ASCL $1billion in a deal that was consumated roughly July 2nd, 2001 (that would be 19 months ago, not one year/12 months). Net to ASCL was $800million after taxes. They only received approximately $700 million, as IBM held back $100 million. Today, they have $500 million, plus the $107million IBM is returning to them, leaving them with approximately $600+ million in cash. This means they've 'lost' approximately $200 m + approximately $200 m they had in the bank as Informix, or $400 million.

        Where did it go? Well... four things have contributed to the reduction: Stock Buyback, Acquisition, Operating Losses, and non-continuing losses.

        At that time, even though they had started the stock buyback already, they had 283million shares outstanding. Today, they have reduced that to 231million (20% reduction in the number of outstanding shares). That has cost them approximately 200m.

        Since becoming Ascential, they have made three strategic acquisitions: Torrent, giving them the unlimited scalability, for roughly $50m. Vality, for best-of-breed data quality, for just under $100m. And finally, MetaRecon, for data profiling, for another $5m. For a total of roughly $150m.

        The rest, roughly another $50m, has been in the form of operating and non-recurring losses. The non-recurring has been things like merger related expenses, facilities charges for old Informix leases, etc... that they don't expect to keep for much longer.

        Now, IG likes the state that they only 'claim' to have increased revenue on a 'pro forma' basis. Well, I guess he doesn't quite understand the term. The reality is, they have increased the revenue from $27m in Dec. 2001, to $34m in Dec. 2002. That's roughly a 20% increase in year-to-year revenue.

        They have also achieved 'Pro Forma' profitability. Somewhat a nebulous term, as they are still losing money, but it is a very important first step. They have made the claim that they will achieve full GAAP profitability (truly making money) this year.

      • theartistformerlyknownasaminarut theartistformerlyknownasaminarut Feb 3, 2003 1:22 PM Flag

        You and your arithmetic again. Did you get past the 4th grade? They had $1 billion and now have $600M after retiring 20% of the float, and aquisitions that are clearly helping the bottom line, as demonstrated by the GROWTH (YES GROWTH) in revenue and eps.
        No matter what you say, and how you try to portray it, this is exemplary performace, especially in light of the tough economic times.
        But then again, your failure to recognize good strategy is probably one of the reasons you were fired.
        And BTW, if we were still IFMX, we would be a penny stock now.


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